Goldman Sachs To Create Internal 'Business Standards Committee'

NEW YORK — Goldman Sachs' embattled Chairman and CEO Lloyd Blankfein told investors Friday that the firm is creating a business standards committee to study the bank's practices in the wake of the civil fraud suit launched by the Securities and Exchange Commission and the criminal probe opened by the Justice Department.

"We need a rigorous self-examination," Blankfein told investors gathered at the annual shareholders' meeting Friday, held a few blocks away from the investment firm's global headquarters in New York. "Our firm must review our core principles."

He noted there's been a disconnect between how the company views itself and how outsiders view the firm. The committee, which will report to the board of directors, will review both services and products that Goldman Sachs offers.

Blankfein is facing scrutiny from investors amid the much publicized charges launched last month. He's expected to defend the company while vigorously trying to save his job. Investors also are looking to hear any comments from the top brass about whether Goldman Sachs has begun settlement talks with the SEC. The Wall Street Journal reported on Friday that company lawyers met with SEC officials this week in a first move toward a potential settlement, though the two sides remain far apart. The newspaper quoted unnamed sources familiar with the matter.

Shares of Goldman have been down more than 20 percent since the SEC announced the charges last month. They grew out of a 2007 transaction involving collateralized debt obligations, or CDOs – complex mortgage-related securities that many analysts say helped accelerate the financial crisis and the Great Recession when they dramatically fell in value. The government said Goldman did not divulge to two clients that the CDOs they purchased were created in part by billionaire hedge fund manager John Paulson, who was betting on them to fail. Goldman has denied any wrongdoing and said that it lost money on that particular deal.

As for the criminal investigation, announced last week, the probe is in preliminary stages and could end without any charges being filed. Goldman Sachs is also facing multiple shareholder and class-action suits that have been filed since the SEC announced its charges.

According to published reports, settlement charges could range anywhere from $1 billion to $5 billion. But what's really at stake is Goldman Sach's reputation, which has been tarnished since the launch of the SEC charges.

Goldman's power during the financial crisis and the prominence of many former Goldman executives have made the firm a lightning-rod for public outcry over Wall Street's greed and risky behavior. Even before the SEC announcement last month, the bank, both reviled and admired, was defending accusations that its bets helped fuel the financial crisis.

Goldman also has become a scapegoat for Democrats in the increasing debate over the financial overhaul.

Four days after being accused of fraud by the SEC, the bank reported stellar first-quarter profits of $3.3 billion, nearly double from the same period a year ago.

In morning trading, shares of Goldman Sachs rose 98 cents to $143.30.

Comments

[duxguts]

03:06 AM on 05/19/2010

And I suppose Lloyd Blankfein will advise the committee? Why do the Goldman put up with these people, they should be suing them to give the bonus money

[Raggs]

04:04 AM on 05/13/2010

business standards committee first meeting (over a $1000 a head brunch):
CEO: 'can we get away with it?'
Head of legal team : 'yes, we have everyone, that could possibly stop us, in our pockets'
CEO: "Then do it. All day, every day. Now, where IS that wine list?"

[andycan]

11:19 PM on 05/09/2010

Market maker - MARKET FIXER??????????

[andycan]

11:18 PM on 05/09/2010

If you steal 500 dollars at knifepoint, you spend three to five years in jail, if you steal a billion...?

[Mafdet]

05:43 PM on 05/09/2010

What a load of crap. I can only conclude that President Obama, like his predecessor, is a falling down drunkard. Otherwise, he couldn't sleep at night. Because he has screwed the American Public for the pleasure of a reach around from Lloyd Blankfein.

[Terypat]

07:09 AM on 05/09/2010

Goldman did not create a level playing field in the deal. The parties involved were not given complete information. Once upon a time banks operated by a Code of Ethics. The glorious "market maker" divisions at GS did not operate in an ethical manner. The savvy Wall Street titans can try to tell me all they want that I just don't understand the importance of what they do. If they conducted their market making in an ethical manner, then I doubt anything would have to be explained to anyone including the SEC.

[Robert2Parker]

05:50 AM on 05/09/2010

Lets just hope they only change the sign on the door to "CLOSED". Get those white collar dead weights in jail where they belong. These clowns are crooks playing dumb because they think they can wiggle out of trouble by paying off a few of our corrupt congressmen.

Put them in front of a firing squad and watch the corruption dissipate. If our government doesn't do something, the end is near- because the wall street hustlers will just keep reinventing graft until the passive public is eternally $crewed.

[almost homeless]

05:00 AM on 05/09/2010

The fox hiring some more foxes to help it out fox everybody else under the guise of defoxing themselves is just more nonsense. The problem is the undue influence, the insider information, the political manipulation, and a host of other anti-democratic, unfair, and down right criminality towards mankind that makes up 90% of their business.

When a fox is pillaging the hen house you shoot and bury it, not let it restradigize.

[Doug Compagner]

12:26 AM on 05/09/2010

Fannie, Freddie, and Barney need to change also!!

[PhilipTaylor]

12:14 AM on 05/09/2010

1,000 POINT SCAM COULD BE CAUSED BY THIS!

HOW G0LDMAN’S ILLEGAL AUTOMATED FRONT-RUNNING WORKS:

1. G0LDMAN Customer sends in Orders Waiting to be Executed by G0LDMAN
2. G0LDMAN automatically READS ORDER using their SOFTWARE
3. G0LDMAN's Computers Automatically composes an ORDER to capture Customer PROFITS
4. G0LDMAN Software AUTOMATICALLY Inserts ITS ORDER in FRONT of Customer's Order
5. G0LDMAN CAPTURES the GAIN and immediately Sells for $Millions or even $BILLIONS in gains

It works for Buying or Selling before filling a customer's order! STEAL GOING UP+STEAL GOING DOWN!

SPECIFIC EXAMPLE:

1. Suppose G0LDMAN sees an order in the Computer Trade QUEUE to buy 4,000,000 shares of some stock ready to be placed
2. G0LDMAN’s Software Automatically reads the Customers Order to buy 4,000,000 shares of for his own account at the market - Say it is selling for $100 per share!
3. G0LDMAN’S SOFTWARE CALCULATES a short term price increase caused by the Customers Order of $102 PER SHARE.
4. G0LDMAN SOFTWARE PLACES a G0LDMAN Order to buy 4,000,000 Shares at $100 and buys them.
5. Then G0LDMAN AS MARKET-MAKER executes the customer order for 4,000,000 shares and almost immediately the price jumps to $103.50 within fractions of a second.
6. When the G0LDMAN Target price of $102 is reached the G0LDMAN ORDER is Automatically SOLD and G0LDMAN’s Gross Profit is $8 Million in a fraction of a second.
7. At worst the NET Profit may be only $1.75 X 4,000,000 = $7 Million/ Billionth second!

[Morgantheaxe]

11:09 PM on 05/08/2010

Ok, just a self check here. Greece is struggling to avoid a crippling disaster. There are those on Wall St. that have hedged against Greece getting a bailout and are lobbying those in power in the Eurozone not to bail them out. Let me be clear. A country is struggling for survival and there are people who, to make money, are interfering with that survival. Is that not an act of war? The second question is would anyone here mind at all if the Greek national intelligence agency killed some Wall St. Execs in retaliation for trying to cause the demise of the Greek government as we know it?

[Morgantheaxe]

11:03 PM on 05/08/2010

A few short months ago Goldman was Golden. The prodigys of Wall St. that miraculously made money while all others lost. We see now how they did it. They sold their dog shhhhiiiieeeettttt stock out of their own portfolio to their own customers, and then shorted those very same stocks. They don't seem so smart now do they. How smart is a company that lives and dies by the trust of its customers that is screwing its own customers. See ya Goldman and oh ya Blanfein the ceo of Bear Stearns has plenty of time on his hands golfing. Maybe you should look him up and you can both play 36 holes and have a big laugh about the hundreds of millions you both made while totally screwing up good companys.

[mountainweb]

09:52 PM on 05/08/2010

"business standards committee", oh, what a joke. Committee is a way to "appear" to be doing something when you have no intention of doing anything. Our Senate and Congress are famous for this trick.....

[gmb007]

08:46 PM on 05/08/2010

"Will Goldman Change? Bank Creates Committee To Review Its Practices”

Oh, puhleeze. If GS gave a flying rat’s ass about honesty and ethics, they’d already be doing the right thing. This is pure, unmitigated theatrics.

Dear America,

Yes, we got caught stealing not only a few macadamia nut-chocolate chip cookies but the entire cookie jar and we’re SO SORRY we got caught (can you ever forgive us?) - but we’ve seen the error of our ways (how the crap did we get caught??), so we’re humbly setting up our Brand New Shiny Goldman Sachs Official Committee of Predatory Foxes Overseeing Said Predatory Foxes Guarding Multi-Billions of Hen Houses (aka “BNSGSOCPFOSPFGMBHH”) to make damn sure this terrible financial mess never happens again (or at least that we don’t get caught again).

Your most humble Wall Street servant,

Lloyd Foxfein

[Keith Deines]

08:05 PM on 05/08/2010

I feel so much safer now!