Goldman Said To Be Reviewing Conflict-Of-Interest Policies

Goldman Randomly Picks This Week To Review Its Conflict-Of-Interest Rules

Perhaps aware that everyone in America is paying it attention this week, Goldman Sachs is reviewing its policies on employee conflicts of interest, according to The Wall Street Journal.

Goldman, the fifth-largest U.S. bank by assets and recently the subject of a scathing New York Times opinion piece written by a former employee, told the WSJ that it is revisiting the rules it has in place regarding employee disclosures when advising on business deals.

The review -- one of many currently taking place in the financial world -- appears to be the result of a recent case where Stephen Daniel, a Goldman banker, acted as an advisor to the energy firm El Paso while El Paso was in the process of being acquired by the company Kinder Morgan.

The problem there was that Daniel owned about $300,000 in Kinder Morgan stock, representing what a judge called a "real and potent" conflict of interest for Goldman, according to Bloomberg.

Though Daniel's actions are being cited as the reason for this review, it's possible that the NYT editorial, by former Goldman executive director Greg Smith, has also acted as a catalyst, due to the way it focused public attention on the firm. One of Smith's accusations against Goldman is that bankers are encouraged to maximize company profits even when it's not always in the best interests of clients -- a charge that has sparked renewed discussion among lawmakers about the Volcker rule, an embattled section of the Dodd-Frank financial regulatory act currently under review.

This isn't the first time Goldman Sachs has been embroiled in a conflict-of-interest case either. In 2011, a Senate investigative panel accused Goldman of repeatedly misleading clients as to the value of certain mortgage-backed securities that Goldman employees privately considered bad investments. And in 2010, Goldman agreed to pay a $550 million fine to the Securities and Exchange Commission over similar accusations.

The bank was also the subject of scrutiny last year when it was revealed that former Goldman vice president Neil Morrison advised Massachusetts state treasurer Tim Cahill during Cahill's 2010 run for governor. In one case, according to The Boston Globe, Morrison e-mailed Cahill's office with campaign suggestions and included in his message the instruction to "please delete this e-mail."

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