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Goldman Sachs () is an American multinational
investment bank Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing is ...
and
financial services Financial services are the Service (economics), economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, acco ...
company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in
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, with regional
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in
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,
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,
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,
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,
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,
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and
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, and additional offices in other international financial centers. Goldman Sachs is the second largest investment bank in the world by revenue and is ranked 57th on the
Fortune 500 The ''Fortune'' 500 is an annual list compiled and published by ''Fortune (magazine), Fortune'' magazine that ranks 500 of the largest United States Joint-stock company#Closely held corporations and publicly traded corporations, corporations by ...
list of the largest United States corporations by total revenue. It is considered a
systemically important financial institution A systemically important financial institution (SIFI) is a bank, insurance company, or other financial institution whose failure might trigger a financial crisis. They are colloquially referred to as "too big to fail". As the financial crisis o ...
by the
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. The company has been criticized for a lack of ethical standards, working with dictatorial regimes, close relationships with the U.S. federal government via a "
revolving door A revolving door typically consists of three or four doors that hang on a central shaft and rotate around a vertical axis within a cylindrical enclosure. Revolving doors are energy efficient as they, acting as an airlock, prevent drafts, thus d ...
" of former employees, and driving up prices of
commodities In economics, a commodity is an economic goods, good, usually a resource, that has full or substantial fungibility: that is, the Market (economics), market treats instances of the good as equivalent or nearly so with no regard to who Production ...
through futures speculation. While the company has appeared on the
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list compiled by '' Fortune'', primarily due to its high compensation levels, it has also been criticized by its employees for 100-hour work weeks, high levels of employee dissatisfaction among first-year analysts, abusive treatment by superiors, a lack of mental health resources, and extremely high levels of stress in the workplace leading to physical discomfort. The company invests in and arranges financing for startups, and in many cases gets additional business when the companies launch
initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically Underwriting, underwritten by one or mo ...
s. Notable
initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically Underwriting, underwritten by one or mo ...
s for which Goldman Sachs was the lead bookrunner include those of
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, Bumble, Robinhood Markets. Startups in which the company or its funds have invested include
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, Foodpanda, and Dropbox, among others. It is a partner organization of the
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.


History


Founding and establishment

Goldman Sachs was founded in New York City in 1869 by Marcus Goldman. In 1882, Goldman's son-in-law Samuel Sachs joined the firm. In 1885, Goldman took his son Henry and his son-in-law Ludwig Dreyfuss into the business and the firm adopted its present name, Goldman Sachs & Co. The company pioneered the use of commercial paper for entrepreneurs and joined the
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City New York, often called New York City or NYC, is the List o ...
(NYSE) in 1896. By 1898, the firm's capital stood at $1.6 million. Goldman entered the
initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically Underwriting, underwritten by one or mo ...
market in 1906 when it took
Sears, Roebuck and Company Sears, Roebuck and Co. ( ), commonly known as Sears, is an American chain of department stores founded in 1892 by Richard Warren Sears and Alvah Curtis Roebuck and reincorporated in 1906 by Richard Sears and Julius Rosenwald, with what began as ...
public. The deal was facilitated by Henry Goldman's personal friendship with Julius Rosenwald, an owner of Sears. Other IPOs followed, including F. W. Woolworth and Continental Can. In 1912, Henry S. Bowers became the first non-member of the founding family to become a partner of the company and share in its profits. In 1917, under growing pressure from the other partners in the firm due to his pro-German stance, Henry Goldman resigned. The Sachs family gained full control of the firm until Waddill Catchings joined the company in 1918. By 1928, Catchings was the Goldman partner with the single largest stake in the firm. On December 4, 1928, the firm launched the Goldman Sachs Trading Corp, a
closed-end fund A closed-end fund (CEF) is a fund that raises capital by issuing a fixed number of shares which are not redeemable, and then invest that capital in financial assets such as stocks and bonds. Unlike open-end funds, new shares in a closed-end fund ...
. The fund failed during the Stock Market Crash of 1929, amid accusations that Goldman had engaged in share price manipulation and
insider trading Insider trading is the trading of a public company's stock or other security (finance), securities (such as bond (finance), bonds or Option (finance), stock options) based on material, nonpublic information about the company. In various countries ...
.


Mid-20th century

In 1930, the firm ousted Catchings, and Sidney Weinberg assumed the role of senior partner and shifted Goldman's focus away from trading and toward
investment banking Investment banking pertains to certain activities of a financial services company or a Corporate structure, corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Tradition ...
. Weinberg's actions helped to restore some of Goldman's tarnished reputation. Under Weinberg's leadership, Goldman was the lead advisor on the
Ford Motor Company Ford Motor Company (commonly known as Ford) is an American multinational corporation, multinational automobile manufacturer headquartered in Dearborn, Michigan, Dearborn, Michigan, United States. It was founded by Henry Ford and incorporated o ...
's IPO in 1956, a major coup on Wall Street at the time. Under Weinberg's reign, the firm started an investment research division and a
municipal bond A municipal bond, commonly known as a muni, is a bond issued by state or local governments, or entities they create such as authorities and special districts. In the United States, interest income received by holders of municipal bonds is often, ...
department, and it became an early innovator in risk arbitrage. In the 1950s, Gus Levy joined the firm as a securities trader, where two powers fought for supremacy, one from investment banking and one from securities trading. Levy was a pioneer in block trading and the firm established this trend under his guidance. Due to Weinberg's heavy influence, the firm formed an investment banking division in 1956 in an attempt to shift focus off Weinberg. In 1957, the company's headquarters were relocated to 20 Broad Street, New York City. In 1969, Levy took over Weinberg's role as Senior Partner and built Goldman's trading franchise once again. Levy is credited with Goldman's famous philosophy of being "long-term greedy," which implied that as long as money is made over the long term, short-term losses are bearable. At the same time, partners reinvested nearly all of their earnings in the firm. Weinberg remained a senior partner of the firm and died in July of that year. Another financial crisis for the firm occurred in 1970, when the
Penn Central Transportation Company The Penn Central Transportation Company, commonly abbreviated to Penn Central, was an American Railroad classes, class I railroad that operated from 1968 to 1976. Penn Central combined three traditional corporate rivals (the Pennsylvania Railroad ...
went bankrupt with over $80 million in commercial paper outstanding, most of it issued through Goldman Sachs. The bankruptcy was large, and the resulting lawsuits, notably by the SEC, threatened the partnership capital, survival, and reputation of the firm. It was this bankruptcy that resulted in
credit rating A credit rating is an evaluation of the credit risk A credit risk is risk of default on a debt that may arise from a borrower failing to make required payments. In the first resort, the risk is that of the lender and includes lost principal an ...
s for every issuer of commercial paper today by several credit rating services. Under the direction of Senior Partner Stanley R. Miller, the firm opened its first international office in London in 1970 and created a Private Wealth Management division along with a fixed income division in 1972. It pioneered the "
white knight A white knight is a mythological figure and literary stock character. They are portrayed alongside a black knight as diametric opposites. A white knight usually represents a heroic warrior fighting against evil, with the role in medieval literatu ...
" strategy in 1974 during its attempts to defend Electric Storage Battery against a
hostile takeover In business, a takeover is the purchase of one company (law), company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in ...
bid from International Nickel and Goldman's rival,
Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
. John L. Weinberg (the son of Sidney Weinberg), and John C. Whitehead assumed roles of co-senior partners in 1976, once again emphasizing the co-leadership at the firm. One of their initiatives was the establishment of 14 business principles that the firm still claims to apply.


Late 20th century

On November 16, 1981, the firm acquired J. Aron & Company, a commodities trading firm which merged with the Fixed Income division to become known as Fixed Income, Currencies, and Commodities. J. Aron was involved in the coffee and gold markets, and the former CEO of Goldman, Lloyd Blankfein, joined the firm as a result of this merger. In 1985, it underwrote the public offering of the
real estate investment trust A real estate investment trust (REIT) is a company that owns, and in most cases operates, income-producing real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minera ...
that owned
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, then the largest
REIT A real estate investment trust (REIT) is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, including office building, office and apartment buildings, warehouses, hospital ...
offering in history. In accordance with the beginning of the
dissolution of the Soviet Union The dissolution of the Soviet Union, also negatively connoted as rus, Разва́л Сове́тского Сою́за, r=Razvál Sovétskogo Soyúza, ''Ruining of the Soviet Union''. was the process of internal disintegration within the Sov ...
, the firm also became involved in facilitating the global privatization movement by advising companies that were spinning off from their parent governments. In 1986, the firm formed Goldman Sachs Asset Management, which manages the majority of its mutual funds and
hedge fund A hedge fund is a pooled investment fund that trades in relatively Market liquidity, liquid assets and is able to make extensive use of more complex trader (finance), trading, portfolio (finance), portfolio-construction, and risk management techn ...
s. In the same year, the firm also underwrote the IPO of
Microsoft Microsoft Corporation is an American multinational corporation, multinational technology company, technology corporation producing Software, computer software, consumer electronics, personal computers, and related services headquartered at th ...
, advised
General Electric General Electric Company (GE) is an American multinational conglomerate founded in 1892, and incorporated in New York state and headquartered in Boston Boston (), officially the City of Boston, is the capital city, state capital a ...
on its acquisition of
RCA The RCA Corporation was a major American electronics company, which was founded as the Radio Corporation of America in 1919. It was initially a patent pool, patent trust owned by General Electric (GE), Westinghouse Electric Corporation, Westin ...
, joined the
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and
Tokyo stock exchange The , abbreviated as Tosho () or TSE/TYO, is a stock exchange located in Tokyo, Japan. It is the third largest stock exchange in the world by aggregate market capitalization of its listed companies, and the largest in Asia. It had 2,292 listed co ...
s, and became the first United States bank to rank in the top 10 of
mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of Company, companies, other business organizations, or their operating units are transferred to or Consolidation (business), consolidated with another company or b ...
in the United Kingdom. During the 1980s, the firm became the first bank to distribute its investment research electronically and created the first public offering of original issue deep-discount bond. Robert Rubin and Stephen Friedman assumed the co-senior partnership in 1990 and pledged to focus on globalization of the firm to strengthen the merger & acquisition and trading business lines. During their tenure as co-senior partners, the firm introduced paperless trading to the New York Stock Exchange and lead-managed the first-ever global debt offering by a U.S. corporation. In 1994, it also launched the Goldman Sachs Commodity Index (GSCI) and opened its first office in China in
Beijing } Beijing ( ; ; ), alternatively romanized as Peking ( ), is the capital of the People's Republic of China. It is the center of power and development of the country. Beijing is the world's most populous national capital city, with over 21 ...
. That same year, Jon Corzine became CEO, following the departure of Rubin and Friedman. Rubin had drawn criticism in Congress for using a Treasury Department account under his personal control to distribute $20 billion to bail out Mexican bonds, of which Goldman was a key distributor. On November 22, 1994, the Mexican Bolsa stock market admitted Goldman Sachs and one other firm to operate on that market. The 1994 economic crisis in Mexico threatened to wipe out the value of Mexico's bonds held by Goldman Sachs. In 1994, Goldman financed
Rockefeller Center Rockefeller Center is a large complex consisting of 19 commerce, commercial buildings covering between 48th Street (Manhattan), 48th Street and 51st Street (Manhattan), 51st Street in Midtown Manhattan, New York City. The 14 original Art Deco ...
in a deal that allowed it to take an ownership interest in 1996, and sold
Rockefeller Center Rockefeller Center is a large complex consisting of 19 commerce, commercial buildings covering between 48th Street (Manhattan), 48th Street and 51st Street (Manhattan), 51st Street in Midtown Manhattan, New York City. The 14 original Art Deco ...
to Tishman Speyer in 2000. In April 1996, Goldman was the lead underwriter of the
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IPO. In 1998, it was the co-lead manager of the ¥2 trillion (yen) NTT DoCoMo IPO. In 1999, Goldman acquired Hull Trading Company for $531 million. After decades of debate among the partners, the company became a
public company A public company is a company whose ownership is organized via shares of share capital, stock which are intended to be freely traded on a stock exchange or in Over-the-counter (finance), over-the-counter markets. A public (publicly traded) comp ...
via an
initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically Underwriting, underwritten by one or mo ...
in May 1999. Goldman sold 12.6% of the company to the public, and after the IPO, 48.3% of the company was held by 221 former partners, 21.2% of the company was held by non-partner employees, and the remaining 17.9% was held by retired Goldman partners and two long-time investors, Sumitomo Bank Ltd. and Assn, the investing arm of Kamehameha Schools. The shares were priced at $53 each at listing. After the IPO,
Henry Paulson Henry Merritt Paulson Jr. (born March 28, 1946) is an American banker and financier who served as the 74th United States Secretary of the Treasury from 2006 to 2009. Prior to his role in the Department of the Treasury, Paulson was the Chairman ...
became Chairman and Chief Executive Officer, succeeding Jon Corzine.


21st century

In September 2000, Goldman Sachs purchased Spear, Leeds, & Kellogg, one of the largest specialist firms on the New York Stock Exchange, for $6.3 billion. In January 2000, Goldman, along with
Lehman Brothers Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before Bankruptcy of Lehman Brothers, filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Gol ...
, was the lead manager for the first internet bond offering for the
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. In March 2003, the firm took a 45% stake in a joint venture with JBWere, the Australian investment bank. In April 2003, Goldman acquired The Ayco Company L.P., a fee-based financial counseling service. In December 2005, four years after its report on the emerging "
BRIC BRIC is a grouping acronym An acronym is a word or name formed from the initial components of a longer name or phrase. Acronyms are usually formed from the initial letters of words, as in ''NATO'' (''North Atlantic Treaty Organization'') ...
" economies (Brazil, Russia, India, and China), Goldman Sachs named its " Next Eleven" list of countries, using macroeconomic stability, political maturity, openness of trade and investment policies and quality of education as criteria: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, Turkey, South Korea and Vietnam. In May 2006, Paulson left the firm to serve as
United States Secretary of the Treasury The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States The federal government of the United States ( ...
, and Lloyd Blankfein was promoted to Chairman and Chief Executive Officer. In January 2007, Goldman, along with CanWest Global Communications, acquired Alliance Atlantis, the company with the broadcast rights to the CSI franchise.


Subprime mortgage crisis: 2007–2008

As a result of its involvement in securitization during the
subprime mortgage crisis The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the Financial crisis of 2007–2008, 2007–2008 global financial crisis. It was triggered by a large decline ...
, Goldman Sachs suffered during the
financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of Production (economics), production, Distribution (economics), distribution, and Consumption (economics) ...
, and it received a $10 billion investment from the
United States Department of the Treasury The Department of the Treasury (USDT) is the Treasury, national treasury and finance department of the federal government of the United States, where it serves as an United States federal executive departments, executive department. The departme ...
as part of the
Troubled Asset Relief Program The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector that was passed by Congress and signed into law by Presiden ...
, a financial
bailout A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy. A bailout differs from the term ''bail-in'' (coined in 2010) under which the bondholders or depositors of global syst ...
created by the Emergency Economic Stabilization Act of 2008. The investment was made in November 2008 and was repaid with
interest In finance and economics, interest is payment from a debtor, borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is ...
in June 2009. During the 2007
subprime mortgage crisis The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the Financial crisis of 2007–2008, 2007–2008 global financial crisis. It was triggered by a large decline ...
, Goldman profited from the collapse in subprime mortgage bonds in summer 2007 by short-selling subprime mortgage-backed securities. Two Goldman traders, Michael Swenson and Josh Birnbaum, are credited with being responsible for the firm's large profits during the crisis. The pair, members of Goldman's structured products group in
New York City New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...
, made a profit of $4 billion by "betting" on a collapse in the subprime market and shorting mortgage-related securities. By summer 2007, they persuaded colleagues to see their point of view and convinced skeptical risk management executives. The firm initially avoided large subprime write-downs and achieved a net profit due to significant losses on non-prime securitized loans being offset by gains on short mortgage positions. The firm's viability was later called into question as the crisis intensified in September 2008. On October 15, 2007, as the crisis had begun to unravel, Allan Sloan, a senior editor for '' Fortune'' magazine, wrote:
So let's reduce this macro story to human scale. Meet GSAMP Trust 2006-S3, a $494 million drop in the junk-mortgage bucket, part of the more than half-a-trillion dollars of mortgage-backed securities issued last year. We found this issue by asking mortgage mavens to pick the worst deal they knew of that had been floated by a top-tier firm - and this one's pretty bad. It was sold by Goldman Sachs - GSAMP originally stood for Goldman Sachs Alternative Mortgage Products but now has become a name itself, like
AT&T AT&T Inc. is an American multinational corporation, multinational telecommunications holding company headquartered at Whitacre Tower in Downtown Dallas, Texas. It is the world's List of largest companies by revenue, largest telecommunications ...
and 3M. This issue, which is backed by ultra-risky second-mortgage loans, contains all the elements that facilitated the housing bubble and bust. It's got speculators searching for quick gains in hot housing markets; it's got loans that seem to have been made with little or no serious analysis by lenders; and finally, it's got Wall Street, which churned out mortgage "product" because buyers wanted it. As they say on the Street, "When the ducks quack, feed them."
On September 21, 2008, Goldman Sachs and Morgan Stanley, the last two major investment banks in the United States, both confirmed that they would become traditional bank holding companies. The Federal Reserve's approval of their bid to become banks ended the business model of an independent securities firm, 75 years after Congress separated them from deposit-taking lenders, and capped weeks of chaos that sent
Lehman Brothers Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before Bankruptcy of Lehman Brothers, filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Gol ...
into bankruptcy and led to the rushed sale of
Merrill Lynch Merrill (officially Merrill Lynch, Pierce, Fenner & Smith Incorporated), previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investment banki ...
to Bank of America Corp. On September 23, 2008,
Berkshire Hathaway Berkshire Hathaway Inc. () is an American Multinational corporation, multinational conglomerate (company), conglomerate holding company headquartered in Omaha, Nebraska, United States. Its main business and source of capital is insurance, from ...
agreed to purchase $5 billion in Goldman's preferred stock, and also received warrants to buy another $5 billion in Goldman's
common stock Common stock is a form of corporate equity (finance), equity ownership, a type of security (finance), security. The terms voting share and ordinary share are also used frequently outside of the United States. They are known as equity shares or or ...
within five years. The company also raised $5 billion via a public offering of shares at $123 per share. Goldman also received a $10 billion
preferred stock Preferred stock (also called preferred shares, preference shares, or simply preferreds) is a component of share capital that may have any combination of features not possessed by common stock, including properties of both an equity and a debt inst ...
investment from the U.S. Treasury in October 2008, as part of the
Troubled Asset Relief Program The Troubled Asset Relief Program (TARP) is a program of the United States government to purchase toxic assets and equity from financial institutions to strengthen its financial sector that was passed by Congress and signed into law by Presiden ...
(TARP). Andrew Cuomo, then
New York Attorney General The attorney general of New York is the chief legal officer of the U.S. state of New York (state), New York and head of the Department of Law of the government of New York (state), state government. The office has been in existence in some form s ...
, questioned Goldman's decision to pay 953 employees bonuses of at least $1 million each after it received TARP funds in 2008. In that same period, however, CEO Lloyd Blankfein and six other senior executives opted to forgo bonuses, stating they believed it was the right thing to do, in light of "the fact that we are part of an industry that's directly associated with the ongoing economic distress". Cuomo called the move "appropriate and prudent", and urged the executives of other banks to follow the firm's lead and refuse bonus payments. In June 2009, Goldman Sachs repaid the U.S. Treasury's TARP investment, with 23% interest (in the form of $318 million in preferred dividend payments and $1.418 billion in warrant redemptions). On March 18, 2011, Goldman Sachs received
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
approval to buy back Berkshire's preferred stock in Goldman. In December 2009, Goldman announced that its top 30 executives would be paid year-end bonuses in restricted stock that they cannot sell for five years, with clawback provisions. During the 2008 financial crisis, the
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
introduced a number of short-term credit and liquidity facilities to help stabilize markets. Some of the transactions under these facilities provided liquidity to institutions whose disorderly failure could have severely stressed an already fragile financial system. Goldman Sachs was one of the heaviest users of these loan facilities, taking out many loans between March 18, 2008, and April 22, 2009. The Primary Dealer Credit Facility (PDCF), the first Fed facility ever to provide overnight loans to investment banks, loaned Goldman Sachs a total of $589 billion against collateral such as corporate market instruments and mortgage-backed securities. The Term Securities Lending Facility (TSLF), which allows primary dealers to borrow liquid Treasury securities for one month in exchange for less liquid collateral, loaned Goldman Sachs a total of $193 billion. Goldman Sachs's borrowings totaled $782 billion in hundreds of revolving transactions over these months. The loans were fully repaid in accordance with the terms of the facilities. In 2008, Goldman Sachs started a "Returnship"
internship An internship is a period of work experience offered by an organization for a limited period of time. Once confined to medical graduates, internship is used practice for a wide range of placements in businesses, non-profit organizations and gover ...
program after research and consulting with other firms led them to understand that career breaks happen and that returning to the workforce was difficult, especially for women. The goal of the Returnship program was to offer a chance at temporary employment for workers. Goldman Sachs holds the trademark for the term 'Returnship'. According to a 2009 BrandAsset Valuator survey taken of 17,000 people nationwide, the firm's reputation suffered in 2008 and 2009, and rival Morgan Stanley was respected more than Goldman Sachs, a reversal of the sentiment in 2006. Goldman refused to comment on the findings. In 2011, Goldman took full control of JBWere in a $1 billion buyout.


Global Alpha

According to ''
The Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its The Wall Street Journal Asia, ...
'', in September 2011, Goldman Sachs, announced that it was shutting down its largest hedge fund—Global Alpha Fund LP—which had been housed under Goldman Sachs Asset Management (GSAM). Global Alpha, which was created in the mid-1990s with $10 million, was once "one of the biggest and best performing hedge funds in the world" with more than $12 billion assets under management (AUM) at its peak in 2007. Global Alpha, which used computer-driven models to invest, became known for high-frequency trading and furthered the career of quantitative analysts—'quants'—such as Cliff Asness and Mark Carhart, who were the quant fund's founding fathers and had developed the statistical models that drove the trading. ''
The Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its The Wall Street Journal Asia, ...
'' described Asness and Carhart as managers of Global Alpha, a "big, secretive hedge fund"—the "Cadillac of a fleet of alternative investments" that had made millions for Goldman Sachs by 2006. By mid-2008 the quant fund had declined to 2.5 billion, by June 2011, it was less than $1.7 billion, and by September 2011, after suffering losses that year, it had "about $1 billion AUM.


2013 onwards

In 2013, Goldman underwrote the $2.913 billion Grand Parkway System Toll Revenue Bond offering for the Houston, Texas area, one of the fastest-growing areas in the United States. The bond will be repaid from toll revenue. In April 2013, together with
Deutsche Bank Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational Investment banking, investment bank and financial services company headquartered in Frankfurt, Frankfurt, Germany, and dual-listed on the Frankfurt Stock ...
, Goldman led a $17 billion bond offering by Apple Inc., the largest corporate-bond deal in history and Apple's first since 1996. Goldman Sachs managed both of Apple's previous bond offerings in the 1990s. In June 2013, Goldman Sachs purchased the loan portfolio from Brisbane-based Suncorp Group, one of Australia's largest banks and insurance companies. The A$1.6 billion face amount loan portfolio was purchased for A$960 million. In September 2013, Goldman Sachs Asset Management announced it had entered into an agreement with Deutsche Asset & Wealth Management to acquire its stable value business, with total assets under supervision of $21.6 billion . In August 2015, Goldman Sachs agreed to acquire
General Electric General Electric Company (GE) is an American multinational conglomerate founded in 1892, and incorporated in New York state and headquartered in Boston Boston (), officially the City of Boston, is the capital city, state capital a ...
's GE Capital Bank on-line deposit platform, including US$8-billion of on-line deposits and another US$8-billion of brokered certificates of deposit.


Move into consumer financial products (2016–present)

Starting in 2016, Goldman Sachs has started to move into consumer financial products after spending most of its prior 150 years catering to institutional investors, corporations and governments. In April 2016, Goldman Sachs launched GS Bank, a direct bank. In October 2016, Goldman Sachs Bank USA started offering no-fee unsecured personal loans under the brand Marcus by Goldman Sachs. In March 2016, Goldman Sachs agreed to acquire
financial technology Fintech, a portmanteau of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, blockchain, cloud computing, and big data are r ...
startup Honest Dollar, a digital retirement savings tool founded by American entrepreneur Whurley, focused on helping small-business employees and self-employed workers obtain affordable retirement plans. Terms of the deal were not disclosed. In May 2017, Goldman Sachs purchased $2.8 billion of
PDVSA Petróleos de Venezuela, S.A. (PDVSA, ) (English: Petroleum of Venezuela) is the Venezuelan state-owned oil and natural gas company. It has activities in exploration, production, refining and exporting oil as well as exploration and production ...
2022 bonds from the Central Bank of Venezuela during the 2017 Venezuelan protests. In April 2018, Goldman Sachs acquired Clarity Money, a personal finance startup. On September 10, 2018, Goldman Sachs acquired Boyd Corporation from Genstar Capital for $3 billion. On May 16, 2019, Goldman Sachs acquired United Capital Financial Advisers, LLC for $750 million. In March 2019, Apple, Inc. announced that it would partner with Goldman Sachs to launch the
Apple Card Apple Card is a credit card created by Apple Inc. and issued by Goldman Sachs, designed primarily to be used with Apple Pay on Apple devices such as an iPhone, iPad, Apple Watch, or Macintosh, Mac. Currently, it is available only in the United S ...
, the bank's first credit card offering. The card features a number of consumer-friendly features including no fees, software that encourages users to avoid debt or pay it down quickly, the industry’s lowest interest rate range for comparable cards, and a mandate to approve as many iPhone users as possible. These features are seen as being risky for a bank to take on, and led other banks with established consumer credit card operations including Apple's long time partner
Barclays Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services. Barclays traces ...
, along with
Citigroup Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking ...
,
JPMorgan Chase JPMorgan Chase & Co. is an American Multinational corporation, multinational Investment banking, investment bank and financial services holding company headquartered in City of New York, New York City and Delaware General Corporation Law, inco ...
and Synchrony, to turn down Apple's proposal. Goldman Sachs defended the terms of the deal saying they were "thrilled" with the partnership and seeking "to disrupt consumer finance by putting the customer first." Also in March 2019, Goldman Sachs was fined £34.4 million by the City (London) regulator for misreporting millions of transactions over a decade. In December 2019, the company pledged to give $750 billion to climate transition projects and to stop financing for oil exploration in the Arctic and for some projects related to coal. In June 2020, Goldman Sachs introduced a new corporate typeface, Goldman Sans, and made it freely available. After Internet users discovered that the terms of the license prohibited the disparagement of Goldman Sachs, the bank was much mocked and disparaged in its own font, until it eventually changed the license to the standard SIL Open Font License. Goldman Sachs was embroiled in a major scandal related to Malaysia's sovereign wealth fund, 1Malaysia Development Berhad (1MDB). The bank paid a fine of $2.9 billion under the
Foreign Corrupt Practices Act The Foreign Corrupt Practices Act of 1977 (FCPA) (, ''et seq.'') is a United States federal law that prohibits U.S. citizens and entities from Bribery, bribing foreign government officials to benefit their business interests. The FCPA is applica ...
, the largest such fine of all time. In July 2020, Goldman Sachs agreed on a $3.9 billion settlement in Malaysia for criminal charges related to the 1MDB scandal. For charges brought for the same case in other countries, Goldman Sachs agreed in October of the same year to pay more than $2.9 billion, with over $2 billion going to fines imposed in the US. In August 2021, Goldman Sachs announced that it had agreed to acquire NN Investment Partners, which had 335 billion in assets under management, for €1.7 billion from NN Group. In September 2021, Goldman Sachs announced to acquire GreenSky for about $2.24 billion and completed the acquisition in March 2022. In March 2022, Goldman Sachs announced it was winding down its business in Russia in compliance with regulatory and licensing requirements. Also during that same month, Goldman Sachs announced it had acquired the
Chicago (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = List of sovereign states, Count ...
-based open-architecture digital retirement advice provider, NextCapital Group. In June 2022, Goldman Sachs offered its first ever
derivative In mathematics Mathematics is an area of knowledge that includes the topics of numbers, formulas and related structures, shapes and the spaces in which they are contained, and quantities and their changes. These topics are represented ...
s product linked to
Ether In organic chemistry, ethers are a class of organic compound, compounds that contain an ether functional group, group—an oxygen atom connected to two alkyl or aryl groups. They have the general formula , where R and R′ represent the alkyl o ...
(ETH). Goldman Sachs was announced as an official partner of McLaren. In September 2022, Goldman Sachs announced the layoff of hundreds of employees across the company, apparently as a result of the earnings report from July the same year that showed significantly reduced earnings.


Services offered

Goldman Sachs offers services in
investment banking Investment banking pertains to certain activities of a financial services company or a Corporate structure, corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Tradition ...
(advisory for
mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of Company, companies, other business organizations, or their operating units are transferred to or Consolidation (business), consolidated with another company or b ...
and
restructuring Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Other reason ...
), securities underwriting,
asset management Asset management is a systematic approach to the governance and realization of value from the things that a group or entity is responsible for, over their whole life cycles. It may apply both to tangible assets (physical objects such as buildings ...
and
investment management Investment management is the professional asset management of various Security (finance), securities, including shareholdings, Bond (finance), bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of inv ...
, and
prime brokerage Prime brokerage is the generic name for a bundled package of services offered by investment banks, Wealth management, wealth management firms, and Security (finance), securities dealers to hedge funds which need the ability to borrow securities a ...
. It is a market maker and brokers
credit Credit (from Latin verb ''credit'', meaning "one believes") is the Trust (social sciences), trust which allows one Party (law), party to provide money or resources to another party wherein the second party does not reimburse the first party im ...
products, mortgage-backed securities, insurance-linked securities,
securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
, currencies,
commodities In economics, a commodity is an economic goods, good, usually a resource, that has full or substantial fungibility: that is, the Market (economics), market treats instances of the good as equivalent or nearly so with no regard to who Production ...
, equities, equity derivatives, structured products, options, and
futures contract In finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of Production (economics), production, Distribution (economics), distribution, and Consumpti ...
s. It is a
primary dealer A primary dealer is a firm that buys government securities directly from a government, with the intention of reselling them to others, thus acting as a market maker of government securities. The government may regulate the behaviour and number of ...
in the
United States Treasury security United States Treasury securities, also called Treasuries or Treasurys, are government bond, government debt instruments issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. Sin ...
market. It provides clearing and
custodian bank A custodian bank, or simply custodian, is a specialized financial institution responsible for providing securities services. It safeguards assets of asset managers, insurance companies, hedge funds, and is not engaged in "traditional" commercial ...
services. It provides
wealth management Wealth management (WM) or wealth management advisory (WMA) is an investment advisory service that provides financial management and wealth advisory services to a wide array of clients ranging from Wealth, affluent to High-net-worth individual, hig ...
services via Goldman Sachs Personal Financial Management. It operates
private-equity fund A private equity fund (abbreviated as PE fund) is a collective investment scheme used for making investments in various equity (and to a lesser extent debt) securities according to one of the investment strategies associated with private equity. ...
s, credit and real estate funds, and
hedge fund A hedge fund is a pooled investment fund that trades in relatively Market liquidity, liquid assets and is able to make extensive use of more complex trader (finance), trading, portfolio (finance), portfolio-construction, and risk management techn ...
s. It structures complex and tailor-made financial products. It also owns Goldman Sachs Bank USA, a direct bank. It trades both on behalf of its clients ( flow trading) and for its own account ( proprietary trading).


Philanthropy

According to its website, Goldman Sachs has committed in excess of $1.8 billion to philanthropic initiatives. Goldman Sachs reports its environmental and social performance in an annual report on
Corporate social responsibility Corporate social responsibility (CSR) is a form of international private business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in or supporting volunteering or ethica ...
that follows the Global Reporting Initiative protocol. The company offers a donor advised fund (DAF) called Goldman Sachs Gives that donates to charitable organizations with an employee donation match of up to $20,000. A 2019 investigation by ''Sludge'' of DAFs and
hate group A hate group is a social group In the social sciences, a social group can be defined as two or more people who interact with one another, share similar characteristics, and collectively have a sense of unity. Regardless, social groups co ...
s found that Goldman Sachs's donor advised fund had not been used to fund any SPLC hate groups, but that the fund did not have any explicit policy preventing such donations.


Controversies and legal issues


Role in the financial crisis of 2007-2008

Goldman has been criticized in the aftermath of the
financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of Production (economics), production, Distribution (economics), distribution, and Consumption (economics) ...
, where some alleged that it misled its investors and profited from the collapse of the mortgage market. This situation brought investigations from the
United States Congress The United States Congress is the legislature of the federal government of the United States. It is Bicameralism, bicameral, composed of a lower body, the United States House of Representatives, House of Representatives, and an upper body, ...
, the
United States Department of Justice The United States Department of Justice (DOJ), also known as the Justice Department, is a United States federal executive departments, federal executive department of the United States government tasked with the enforcement of federal law and a ...
, and a lawsuit from the U.S. Securities and Exchange Commission that resulted in Goldman paying a $550 million settlement. Goldman received $12.9 billion from AIG counterparty payments provided by the AIG bailout, $10 billion in TARP money from the government, which it paid back to the government, and a record $11.4 billion set aside for employee bonuses in the first half of 2009. In 2011, a Senate panel released a report accusing Goldman Sachs of misleading clients and engaging in conflicts of interest. In a story in ''
Rolling Stone ''Rolling Stone'' is an American monthly magazine that focuses on music, politics, and popular culture. It was founded in San Francisco, San Francisco, California, in 1967 by Jann Wenner, and the music critic Ralph J. Gleason. It was first kno ...
'', Matt Taibbi characterized Goldman Sachs as a "great vampire squid" sucking money instead of blood, allegedly engineering "every major market manipulation since the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The Financial contagion, ...
... from tech stocks to high gas prices". In June 2009, after the firm repaid the TARP investment from the U.S. Treasury, Goldman made some of the largest bonus payments in its history due to its strong financial performance. Andrew Cuomo, then
New York Attorney General The attorney general of New York is the chief legal officer of the U.S. state of New York (state), New York and head of the Department of Law of the government of New York (state), state government. The office has been in existence in some form s ...
, questioned Goldman's decision to pay 953 employees bonuses of at least $1 million each after it received TARP funds in 2008. That same period, however, CEO Lloyd Blankfein and 6 other senior executives opted to forgo bonuses, stating they believed it was the right thing to do, in light of "the fact that we are part of an industry that's directly associated with the ongoing economic distress". Goldman Sachs maintained that its net exposure to AIG was 'not material', and that the firm was protected by hedges (in the form of CDSs with other counterparties) and $7.5 billion of collateral. The firm stated the cost of these hedges to be over $100 million. According to Goldman, both the collateral and CDSs would have protected the bank from incurring an economic loss in the event of an AIG bankruptcy (however, because AIG was bailed out and not allowed to fail, these hedges did not pay out). CFO David Viniar stated that profits related to AIG in the first quarter of 2009 "rounded to zero", and profits in December were not significant. He went on to say that he was "mystified" by the interest the government and investors have shown in the bank's trading relationship with AIG. Some have said, incorrectly according to others, that Goldman Sachs received preferential treatment from the government by being the only Wall Street firm to have participated in the crucial September meetings at the New York Fed, which decided AIG's fate. Much of this has stemmed from an inaccurate but often quoted ''New York Times'' article. The article was later corrected to state that Blankfein, CEO of Goldman Sachs, was "''one of'' the Wall Street chief executives at the meeting".
Bloomberg Bloomberg may refer to: People * Daniel J. Bloomberg (1905–1984), audio engineer * Georgina Bloomberg (born 1983), professional equestrian * Michael Bloomberg (born 1942), American businessman and founder of Bloomberg L.P.; politician and ma ...
has also reported that representatives from other firms were indeed present at the September AIG meetings. Furthermore, Goldman Sachs CFO David Viniar stated that CEO Blankfein had never "met" with his predecessor and then-US Treasury Secretary Henry Paulson to discuss AIG; however, there were frequent phone calls between the two of them. Paulson was not present at the September meetings at the New York Fed.
Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
was hired by the Federal Reserve to advise on the AIG bailout.


Sale of Dragon Systems to Lernout & Hauspie despite accounting issues

In 2000, Goldman Sachs advised Dragon Systems on its sale to Lernout & Hauspie of Belgium for $580 million in L&H stock. L&H later collapsed due to accounting fraud and its stock price declined significantly. Jim and Janet Baker, founders and together 50% owners of Dragon, filed a lawsuit against Goldman Sachs, alleging negligence, intentional and negligent misrepresentation, and breach of fiduciary duty since Goldman did not warn Dragon or the Bakers of the accounting problems of the acquirer, L&H. On January 23, 2013, a federal jury rejected the Bakers' claims and found Goldman Sachs not liable to the Bakers.


Stock price manipulation

Goldman Sachs was charged for repeatedly issuing research reports with extremely inflated financial projections for Exodus Communications and Goldman Sachs was accused of giving Exodus its highest stock rating even though Goldman knew Exodus did not deserve such a rating. On July 15, 2003, Goldman Sachs,
Lehman Brothers Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before Bankruptcy of Lehman Brothers, filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Gol ...
and
Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
were sued for artificially inflating the stock price of RSL Communications by issuing untrue or materially misleading statements in research analyst reports, and paid $3,380,000 for settlement. Goldman Sachs is accused of asking for kickback bribes from institutional clients who made large profits flipping stocks which Goldman had intentionally undervalued in
initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically Underwriting, underwritten by one or mo ...
s it was underwriting. Documents under seal in a decade-long lawsuit concerning eToys.com's
initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically Underwriting, underwritten by one or mo ...
(IPO) in 1999 but released accidentally to the ''New York Times'' show that IPOs managed by Goldman were underpriced and that Goldman asked clients able to profit from the prices to increase business with it. The clients willingly complied with these demands because they understood it was necessary in order to participate in further such undervalued IPOs. Companies going public and their initial consumer stockholders are both defrauded by this practice.


Use of offshore tax havens

A 2016 report by Citizens for Tax Justice stated that "Goldman Sachs reports having 987 subsidiaries in offshore tax havens, 537 of which are in the
Cayman Islands The Cayman Islands () is a self-governing British Overseas Territories, British Overseas Territory—the largest by population in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac and Little Caym ...
, despite not operating a single legitimate office in that country, according to its own website. The group officially holds $28.6 billion offshore." The report also noted several other major U.S. banks and companies use the same tax-avoidance tactics. In 2008, Goldman Sachs had an effective tax rate of only 1%, down from 34% the year before, and its tax liability decreased to $14 million in 2008, compared to $6 billion in 2007. Critics have argued that the reduction in Goldman Sachs's tax rate was achieved by shifting its earnings to subsidiaries in low or no-tax nations, such as the Cayman Islands.


Involvement in the European sovereign debt crisis

Goldman is being criticized for its involvement in the 2010 European sovereign debt crisis. Goldman Sachs is reported to have systematically helped the Greek government mask the true facts concerning its national debt between the years 1998 and 2009. In September 2009, Goldman Sachs, among others, created a special
credit default swap A credit default swap (CDS) is a Swap (finance), financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt Default (finance), default (by the debtor) or other credit event. That is, the seller of the ...
(CDS) index to cover the high risk of Greece's national debt. The interest-rates of Greek national bonds soared, leading the Greek economy very close to bankruptcy in 2010 and 2011. Ties between Goldman Sachs and European leadership positions were another source of controversy. Lucas Papademos, Greece's former prime minister, ran the Central Bank of Greece at the time of the controversial derivatives deals with Goldman Sachs that enabled Greece to hide the size of its debt. Petros Christodoulou, General Manager of the Greek Public Debt Management Agency is a former employee of Goldman Sachs.
Mario Monti Mario Monti, (born 19 March 1943) is an Italian economist and academic who served as the Prime Minister of Italy from 2011 to 2013, leading a Technocratic government (Italy), technocratic government in the wake of the European sovereign-debt c ...
, Italy's former prime minister and finance minister, who headed the new government that took over after Berlusconi's resignation, is an international adviser to Goldman Sachs. Otmar Issing, former board member of the Bundesbank and the Executive Board of the European Bank also advised Goldman Sachs. Mario Draghi, head of the
European Central Bank The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's Big Four (banking)#Intern ...
and since 2021 prime minister of Italy, is the former managing director of Goldman Sachs International. António Borges, Head of the European Department of the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
in 2010-2011 and responsible for most of enterprise
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
s in Portugal since 2011, is the former Vice Chairman of Goldman Sachs International. Carlos Moedas, a former Goldman Sachs employee, was the Secretary of State to the
Prime Minister of Portugal The prime minister of Portugal ( pt, primeiro-ministro; ) is the head of government of Portugal. As head of government, the prime minister coordinates the actions of ministers, represents the Government of Portugal to the other bodies of state, ...
and Director of ESAME, the agency created to monitor and control the implementation of the structural reforms agreed by the government of Portugal and the troika composed of the
European Commission The European Commission (EC) is the Executive (government), executive of the European Union (EU). It operates as a cabinet government, with 27 European Commissioner, members of the Commission (informally known as "Commissioners") headed by a P ...
, the European Central Bank and the International Monetary Fund. Peter Sutherland, former Attorney General of Ireland was a non-executive director of Goldman Sachs International.


Employees' views

In March 2012, Greg Smith, then-head of Goldman Sachs U.S. equity derivatives sales business in
Europe, the Middle East and Africa EMEA is a shorthand designation meaning Europe, the Middle East and Africa. The acronym is used by institutions and governments, as well as in marketing and business when referring to this region: it is a shorthand way of referencing the two ...
(EMEA), resigned his position via a critical letter printed as an
op-ed An op-ed, short for "opposite the editorial page", is a written prose piece, typically published by a North-American newspaper or magazine, which expresses the opinion of an author usually not affiliated with the publication's editorial board. O ...
in ''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid d ...
''. In the letter, he attacked Goldman Sachs CEO and Chairman Lloyd Blankfein for losing touch with the company's culture, which he described as "the secret sauce that made this place great and allowed us to earn our clients' trust for 143 years". Smith said that advising clients "to do what I believe is right for them" was becoming increasingly unpopular. Instead there was a "toxic and destructive" environment in which "the interests of the client continue to be sidelined", senior management described clients as " muppets" and colleagues callously talked about "ripping their clients off". In reply, Goldman Sachs said that "we will only be successful if our clients are successful", claiming "this fundamental truth lies at the heart of how we conduct ourselves", and that "we don't think mith's commentsreflect the way we run our business". Later that year, Smith published a book titled ''Why I left Goldman Sachs''. According to research by ''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid d ...
'' after the op-ed was printed, almost all the claims made in Smith's incendiary Op-Ed about Goldman Sachs turned out to be "curiously short" on evidence. ''The New York Times'' never issued a retraction or admitted to any error in judgment in initially publishing Smith's op-ed. In 2014, a book by former Goldman portfolio manager Steven George Mandis was published entitled ''What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences''. Mandis left in 2004 after working for the firm for 12 years. In an interview, Mandis said, "You read about Goldman Sachs, and it's either the bank is the best or the bank is the worst, this is not one of those books - things are never black or white." According to Mandis, there was an "organizational drift" in the company's evolution. Mandis also wrote and defended a PhD dissertation about Goldman at
Columbia University Columbia University (also known as Columbia, and officially as Columbia University in the City of New York) is a Private university, private research university in New York City. Established in 1754 as King's College on the grounds of Trinity ...
.


Gender bias lawsuit

In 2010, two former female employees filed a lawsuit against Goldman Sachs for gender discrimination. Cristina Chen-Oster and Shanna Orlich claimed that the firm fostered an "uncorrected culture of sexual harassment and assault" causing women to either be "sexualized or ignored". The suit cited both cultural and pay discrimination including frequent client trips to strip clubs, client golf outings that excluded female employees, and the fact that female vice presidents made 21% less than their male counterparts. In March 2018, the judge ruled that the female employees may pursue their claims as a group in a class-action lawsuit against Goldman on gender bias, but the class action excludes their claim on sexual harassment.


Advice to short California bonds underwritten by the firm

On November 11, 2008, the ''
Los Angeles Times The ''Los Angeles Times'' (abbreviated as ''LA Times'') is a daily newspaper A newspaper is a Periodical literature, periodical publication containing written News, information about current events and is often typed in black ink with a ...
'' reported that Goldman Sachs had both earned $25 million from underwriting California bonds, and advised other clients to short those bonds. While some journalists criticized the contradictory actions, others pointed out that the opposite investment decisions undertaken by the underwriting side and the trading side of the bank were normal and in line with regulations regarding Chinese walls, and in fact critics had demanded increased independence between underwriting and trading.


Personnel "revolving-door" with U.S. government

Several people on the list of former employees of Goldman Sachs have later worked in government positions. Notable examples include
British Prime Minister The prime minister of the United Kingdom is the head of government of the United Kingdom. The prime minister Advice (constitutional law), advises the Monarchy of the United Kingdom, sovereign on the exercise of much of the Royal prerogative ...
Rishi Sunak Rishi Sunak (; born 12 May 1980) is a British politician who has served as Prime Minister of the United Kingdom and Leader of the Conservative Party (UK), Leader of the Conservative Party since October 2022. He previously held two Cabinet of ...
, former U.S. Secretaries of the Treasury Steven Mnuchin, Robert Rubin, and
Henry Paulson Henry Merritt Paulson Jr. (born March 28, 1946) is an American banker and financier who served as the 74th United States Secretary of the Treasury from 2006 to 2009. Prior to his role in the Department of the Treasury, Paulson was the Chairman ...
; U.S. Securities and Exchange Commission Chairman Gary Gensler; former Under Secretary of State John C. Whitehead; former chief economic advisor Gary Cohn;
Governor of New Jersey The governor of New Jersey is the head of government of New Jersey. The office of Governor (United States), governor is an elected position with a four-year term. There is a two consecutive term term limit, with no limitation on non-consecuti ...
Phil Murphy Philip Dunton Murphy (born August 16, 1957) is an American financier, diplomat, and politician serving as the 56th governor of New Jersey The governor of New Jersey is the head of government of New Jersey. The office of Governor (United ...
and former
Governor of New Jersey The governor of New Jersey is the head of government of New Jersey. The office of Governor (United States), governor is an elected position with a four-year term. There is a two consecutive term term limit, with no limitation on non-consecuti ...
Jon Corzine; former
Prime Minister of Italy The Prime Minister of Italy, officially the President of the Council of Ministers ( it, link=no, Presidente del Consiglio dei Ministri), is the head of government of the Italy, Italian Republic. The office of president of the Council of Minist ...
Mario Monti Mario Monti, (born 19 March 1943) is an Italian economist and academic who served as the Prime Minister of Italy from 2011 to 2013, leading a Technocratic government (Italy), technocratic government in the wake of the European sovereign-debt c ...
; former
European Central Bank The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's Big Four (banking)#Intern ...
President and former Prime Minister of Italy Mario Draghi; former
Bank of Canada The Bank of Canada (BoC; french: Banque du Canada) is a Crown corporation and Canada Canada is a country in North America. Its Provinces and territories of Canada, ten provinces and three territories extend from the Atlantic Ocean t ...
and Bank of England Governor Mark Carney; and the former
Prime Minister of Australia The prime minister of Australia is the head of government of the Commonwealth of Australia. The prime minister heads the executive branch of the Australian Government, federal government of Australia and is also accountable to Parliament of A ...
Malcolm Turnbull Malcolm Bligh Turnbull (born 24 October 1954) is an Australian former politician and businessman who served as the 29th prime minister of Australia from 2015 to 2018. He held office as leader of the Liberal Party of Australia. Turnbull grad ...
. In addition, former Goldman employees have headed the
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City New York, often called New York City or NYC, is the List o ...
, the London Stock Exchange Group, the
World Bank The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purpose of pursuing capital pro ...
, and competing banks such as
Citigroup Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking ...
and
Merrill Lynch Merrill (officially Merrill Lynch, Pierce, Fenner & Smith Incorporated), previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investment banki ...
. During 2008 Goldman Sachs received criticism for an apparent
revolving door A revolving door typically consists of three or four doors that hang on a central shaft and rotate around a vertical axis within a cylindrical enclosure. Revolving doors are energy efficient as they, acting as an airlock, prevent drafts, thus d ...
relationship, in which its employees and consultants moved in and out of high-level U.S. Government positions, creating the potential for conflicts of interest and leading to the moniker "Government Sachs". Former Treasury Secretary
Henry Paulson Henry Merritt Paulson Jr. (born March 28, 1946) is an American banker and financier who served as the 74th United States Secretary of the Treasury from 2006 to 2009. Prior to his role in the Department of the Treasury, Paulson was the Chairman ...
and former
United States Senator The United States Senate is the Upper house, upper chamber of the United States Congress, with the United States House of Representatives, House of Representatives being the Lower house, lower chamber. Together they compose the national Bica ...
and former
Governor of New Jersey The governor of New Jersey is the head of government of New Jersey. The office of Governor (United States), governor is an elected position with a four-year term. There is a two consecutive term term limit, with no limitation on non-consecuti ...
Jon Corzine are former CEOs of Goldman Sachs along with current governor Murphy. Additional controversy attended the selection of former Goldman Sachs
lobbyist In politics, lobbying, persuasion or interest representation is the act of lawfully attempting to influence the actions, policies, or decisions of government officials, most often legislators or members of regulatory agency, regulatory agencie ...
Mark A. Patterson as chief of staff to Treasury Secretary Timothy Geithner, despite President
Barack Obama Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party (United States), Democratic Party, Obama was the first Af ...
's campaign promise that he would limit the influence of lobbyists in his administration. In February 2011, the ''
Washington Examiner The ''Washington Examiner'' is an American conservative news outlet which consists principally of an online/digital website with a weekly magazine, based in Washington, D.C. It is owned by MediaDC, a subsidiary of Clarity Media Group, which is ow ...
'' reported that Goldman Sachs was "the company from which Obama raised the most money in 2008", and that its "CEO Lloyd Blankfein has visited the White House 10 times".


Insider trading cases

In 1986, Goldman Sachs investment banker David Brown pleaded guilty to charges of passing inside information on a takeover deal that eventually was provided to Ivan Boesky. In 1989, Robert M. Freeman, who was a senior Partner, who was the Head of Risk Arbitrage, and who was a protégé of Robert Rubin, pleaded guilty to
insider trading Insider trading is the trading of a public company's stock or other security (finance), securities (such as bond (finance), bonds or Option (finance), stock options) based on material, nonpublic information about the company. In various countries ...
, for his own account and for the firm's account.


Rajat Gupta insider trading case

In April 2010, Goldman director
Rajat Gupta Rajat Kumar Gupta (; born ) is an Indian-American businessman and convicted felon who, as Chief executive officer, CEO, was the first foreign-born managing director of management consultancy firm McKinsey & Company from 1994 to 2003. In 2012, he ...
was named in an insider-trading case. It was said Gupta had "tipped off a hedge-fund billionaire", Raj Rajaratnam of
Galleon Group The Galleon Group was one of the largest hedge fund management firms in the world, managing over $7 billion, before closing in October 2009. The firm was the center of a 2009 insider trading scandal which subsequently led to its fall. The firm wa ...
, about the $5 billion Berkshire Hathaway investment in Goldman during the financial crisis of 2007-2008. According to the report, Gupta had told Goldman the month before his involvement became public that he wouldn't seek re-election as a director.James, Frank
"Goldman Sachs Director Tied To Insider-Trading Scandal"
,
NPR National Public Radio (NPR, stylized in all lowercase) is an American privately and state funded nonprofit media organization headquartered in Washington, D.C., with its NPR West headquarters in Culver City, California. It differs from othe ...
, April 23, 2010. Retrieved March 1, 2011.
In early 2011, with the delayed Rajaratnam criminal trial about to begin, the
United States Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agencies of the United States government, independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary pu ...
(SEC) announced civil charges against Gupta covering the Berkshire investment as well as confidential quarterly earnings information from Goldman and
Procter & Gamble The Procter & Gamble Company (P&G) is an American multinational Final good, consumer goods corporation headquartered in Cincinnati, Cincinnati, Ohio, founded in 1837 by William Procter (industrialist), William Procter and James Gamble (industr ...
(P&G). Gupta was a board member at P&G until voluntarily resigning the day of the SEC announcement after the charges were announced. "Gupta was an investor in some of the Galleon hedge funds when he passed the information along, and he had other business interests with Rajaratnam that were potentially lucrative... Rajaratnam used the information from Gupta to illegally profit in hedge fund trades... The information on Goldman made Rajaratnam's funds $17 million richer... The Procter & Gamble data created illegal profits of more than $570,000 for Galleon funds managed by others, the SEC said." Gupta was said to have "vigorously denied the SEC accusations". He was also a board member of
AMR Corporation AMR Corporation was an airline holding company based in Fort Worth, Texas, Fort Worth, Texas, which was the parent company of American Airlines, Envoy Air, American Eagle Airlines, AmericanConnection and Executive Airlines. AMR filed for Chapter ...
. Gupta was convicted in June 2012 on
insider trading Insider trading is the trading of a public company's stock or other security (finance), securities (such as bond (finance), bonds or Option (finance), stock options) based on material, nonpublic information about the company. In various countries ...
charges stemming from Galleon Group case on four criminal felony counts of
conspiracy A conspiracy, also known as a plot, is a secret plan or agreement between persons (called conspirers or conspirators) for an unlawful or harmful purpose, such as murder or treason, especially with political motivation, while keeping their agree ...
and
securities fraud Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodity market, commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequentl ...
. He was sentenced in October 2012 to two years in prison, an additional year on supervised release and ordered to pay $5 million in fines.


Abacus synthetic CDOs and SEC lawsuit

Unlike many investors and investment bankers, Goldman Sachs anticipated the
subprime mortgage crisis The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the Financial crisis of 2007–2008, 2007–2008 global financial crisis. It was triggered by a large decline ...
that developed in 2007-8. ''This article describes the intricate links between Goldman Sachs trader, Jonathan M. Egol, synthetic collateralized debt obligations, or C.D.O., ABACUS, and asset-backed securities index (ABX)'' Some of its traders became "bearish" on the housing boom beginning in 2004 and developed mortgage-related securities, originally intended to protect Goldman from investment losses in the housing market. In late 2006, Goldman management changed the firm's overall stance on the mortgage market from positive to negative. As the market began its downturn, Goldman "created even more of these securities", no longer just hedging or satisfying investor orders but, according to business journalist Gretchen Morgenson, "enabling it to pocket huge profits" from the mortgage defaults and that Goldman "used the C.D.O.'s to place unusually large negative bets that were not mainly for hedging purposes". Authors Bethany McLean and Joe Nocera stated that "the firm's later insistence that it was merely a 'market maker' in these transactions - implying that it had no stake in the economic performance of the securities it was selling to clients - became less true over time"- The investments were called synthetic CDOs because unlike regular
collateralized debt obligation A collateralized debt obligation (CDO) is a type of structured finance, structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets, after 2002 CDOs became vehicles for refinancing Mortgage-backed se ...
s, the principal and interest they paid out came not from mortgages or other loans, but from premiums to pay for insurance against mortgage defaults - the insurance known as "
credit default swap A credit default swap (CDS) is a Swap (finance), financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt Default (finance), default (by the debtor) or other credit event. That is, the seller of the ...
s". Goldman and some other hedge funds held a "short" position in the securities, paying the premiums, while the investors (insurance companies, pension funds, etc.) receiving the premiums were the "long" position. The longs were responsible for paying the insurance "claim" to Goldman and any other shorts if the mortgages or other loans defaulted. Through April 2007, Goldman issued over 20 CDOs in its "Abacus" series worth a total of $10.9 billion. All together Goldman packaged, sold, and shorted a total of 47 synthetic CDOs, with an aggregate face value of $66 billion between July 1, 2004, and May 31, 2007. But while Goldman was praised for its foresight, some argued its bets against the securities it created gave it a vested interest in their failure. These securities performed very poorly for the long investors and by April 2010, at least US$5 billion worth of the securities either carried "junk" ratings or had defaulted. One CDO examined by critics which Goldman bet against but also sold to investors, was the $800 million Hudson Mezzanine CDO issued in 2006. In the Senate Permanent Subcommittee hearings, Goldman executives stated that the company was trying to remove subprime securities from its books. Unable to sell them directly, it included them in the underlying securities of the CDO and took the short side, but critics McLean and Nocera complained the CDO prospectus did not explain this but described its contents as "'assets sourced from the Street', making it sound as though Goldman randomly selected the securities, instead of specifically creating a hedge for its own book". The CDO did not perform well, and by March 2008 - just 18 months after its issue - so many borrowers had defaulted that holders of the security paid out "about US$310 million to Goldman and others who had bet against it". Goldman's head of European fixed-income sales lamented in an e-mail made public by the Senate Permanent Subcommittee on Investigations, the "real bad feeling across European sales about some of the trades we did with clients" who had invested in the CDO. "The damage this has done to our franchise is very significant."


2010 SEC civil fraud lawsuit

In April 2010, the U.S. Securities and Exchange Commission (SEC) charged Goldman Sachs and one of its vice-presidents, Fabrice Tourre, with securities fraud. The SEC alleged that Goldman had told buyers of a synthetic CDO, a type of investment, that the underlying assets in the investment had been picked by an independent CDO manager, ACA Management. In fact, Paulson & Co. a
hedge fund A hedge fund is a pooled investment fund that trades in relatively Market liquidity, liquid assets and is able to make extensive use of more complex trader (finance), trading, portfolio (finance), portfolio-construction, and risk management techn ...
that wanted to bet against the investment had played a "significant role" in the selection,
Financial Crisis Inquiry Report
'', by the Financial Crisis Inquiry Commission, 2011, p.192
and the package of securities turned out to become "one of the worst-performing mortgage deals of the housing crisis" because "less than a year after the deal was completed, 100% of the bonds selected for Abacus had been downgraded". The particular synthetic CDO that the SEC's 2010 fraud suit charged Goldman with misleading investors with was called Abacus 2007-AC1. Unlike many of the Abacus securities, 2007-AC1 did not have Goldman Sachs as a short seller, in fact, Goldman Sachs lost money on the deal. That position was taken by the customer ( John Paulson) who hired Goldman to issue the security (according to the SEC's complaint). Paulson and his employees selected 90 BBB-rated mortgage bonds that they believed were most likely to lose value and so the best bet to buy insurance for. Paulson and the manager of the CDO, ACA Management, worked on the portfolio of 90 bonds to be insured (ACA allegedly unaware of Paulson's short position), coming to an agreement in late February 2007. Paulson paid Goldman approximately US$15 million for its work in the deal. Paulson ultimately made a US$1 billion profit from the short investments, the profits coming from the losses of the investors and their insurers. These were primarily IKB Deutsche Industriebank (US$150 million loss), and the investors and insurers of another US$900 million - ACA Financial Guaranty Corp,
ABN AMRO ABN or abn may refer to: Companies * ABN AMRO Group, a Dutch bank group * ABN AMRO, sometimes referred to as "ABN" in shorthand, is a Dutch state-owned bank * Algemene Bank Nederland, a now-defunct Dutch bank Radio, news and television organizati ...
, and the
Royal Bank of Scotland The Royal Bank of Scotland plc (RBS; gd, Banca Rìoghail na h-Alba) is a major retail banking, retail and commercial bank in Scotland. It is one of the retail banking subsidiaries of NatWest Group, together with NatWest (in England and Wales) ...
. The SEC alleged that Goldman "materially misstated and omitted facts in disclosure documents" about the financial security, including the fact that it had "permitted a client that was betting against the mortgage market he hedge fund manager Paulson & Co.to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party", ACA Management. The SEC further alleged that "Tourre also misled ACA into believing ... that Paulson's interests in the collateral section icprocess were aligned with ACA's, when, in reality, Paulson's interests were sharply conflicting". In reply, Goldman issued a statement saying the SEC's charges were "unfounded in law and fact", and in later statements maintained that it had not structured the portfolio to lose money, that it had provided extensive disclosure to the long investors in the CDO, that it had lost $90 million, that ACA selected the portfolio without Goldman suggesting Paulson was to be a long investor, that it did not disclose the identities of a buyer to a seller, and vice versa, as it was not normal business practice for a market maker, and that ACA was itself the largest purchaser of the Abacus pool, investing US$951 million. Goldman also stated that any investor losses resulted from the overall negative performance of the entire sector, rather than from a particular security in the CDO. While some journalists and analysts have called these statements misleading, others believed Goldman's defense was strong and the SEC's case was weak. Some experts on securities law such as
Duke University Duke University is a Private university, private research university in Durham, North Carolina. Founded by Methodists and Quakers in the present-day city of Trinity, North Carolina, Trinity in 1838, the school moved to Durham in 1892. In 1924, t ...
law professor James Cox, believed the suit had merit because Goldman was aware of the relevance of Paulson's involvement and took steps to downplay it. Others, including
Wayne State University Law School Wayne State University Law School (Wayne Law) is the law school of Wayne State University in Detroit. Wayne Law is located in Midtown Detroit, Midtown, Detroit's Cultural Center. Founded in 1927, the law school offers Juris Doctor, juris doctor (J ...
law professor Peter Henning, noted that the major purchasers were sophisticated investors capable of accurately assessing the risks involved, even without knowledge of the part played by Paulson. Critics of Goldman Sachs point out that Paulson went to Goldman Sachs after being turned down for ethical reasons by another investment bank,
Bear Stearns The Bear Stearns Companies, Inc. was a New York-based global investment bank, securities trading and brokerage firm that failed in 2008 as part of the global financial crisis and recession, and was subsequently sold to JPMorgan Chase. The c ...
who he had asked to build a CDO. Ira Wagner, the head of Bear Stearns's CDO Group in 2007, told the Financial Crisis Inquiry Commission that having the short investors select the referenced collateral as a serious conflict of interest and the structure of the deal Paulson was proposing encouraged Paulson to pick the worst assets. Describing Bear Stearns's reasoning, one author compared the deal to "a bettor asking a football owner to bench a star quarterback to improve the odds of his wager against the team". Goldman claimed it lost $90 million, critics maintain it was simply unable (not due to a lack of trying) to shed its position before the underlying securities defaulted. Critics also question whether the deal was ethical, even if it was legal. Goldman had considerable advantages over its long customers. According to McLean and Nocera, there were dozens of securities being insured in the CDO - for example, another ABACUS - had 130 credits from several different mortgage originators, commercial mortgage-backed securities, debt from Sallie Mae, credit cards, etc. Goldman bought mortgages to create securities, which made it "far more likely than its clients to have early knowledge" that the housing bubble was deflating and the mortgage originators like New Century had begun to falsify documentation and sell mortgages to customers unable to pay the mortgage-holders back - which is why the fine print on at least one ABACUS prospectus warned long investors that the 'Protection Buyer' (Goldman) 'may have information, including material, non-public information' which it was not providing to the long investors.McLean and Nocera, ''All the Devils Are Here'', 2010, p.272 According to an article in the ''
Houston Chronicle The ''Houston Chronicle'' is the largest daily newspaper in Houston, Houston, Texas, United States. , it is the third-largest newspaper by Sunday circulation in the United States, behind only ''The New York Times'' and the ''Los Angeles Times'' ...
'', critics also worried that Abacus might undermine the position of the United States "as a safe harbor for the world's investors" and that "The involvement of European interests as losers in this allegedly fixed game has attracted the attention of that region's political leaders, most notably British Prime Minister Gordon Brown, who has accused Goldman of "moral bankruptcy". This is, in short, a big global story ... Is what Goldman Sachs did with its Abacus investment vehicle illegal? That will be for the courts to decide, ... But it doesn't take a judge and jury to conclude that, legalities aside, this was just wrong." On July 15, 2010, Goldman settled out of court, agreeing to pay the SEC and investors US$550 million, including $300 million to the U.S. government and $250 million to investors, one of the largest penalties ever paid by a Wall Street firm. In August 2013, Tourre was found liable on 6 of 7 counts by a federal jury. The company did not admit or deny wrongdoing, but did admit that its marketing materials for the investment "contained incomplete information", and agreed to change some of its business practices regarding mortgage investments.


Tourre defense of ABACUS lawsuit

The 2010 Goldman settlement did not cover charges against Goldman vice president and salesman for ABACUS, Fabrice Tourre. Tourre unsuccessfully sought a dismissal of the suit, which then went to trial in 2013. On August 1, a federal jury found Tourre liable on six of seven counts, including that he misled investors about the mortgage deal. He was found not liable on the charge that he had deliberately made an untrue or misleading statement.


Alleged commodity price manipulation

A provision of the 1999 financial deregulation law, the Gramm-Leach-Bliley Act, allows commercial banks to enter into any business activity that is "complementary to a financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally". In the years since the laws passing, Goldman Sachs and other investment banks (Morgan Stanley, JPMorgan Chase) have branched out into ownership of a wide variety of enterprises including raw materials, such as food products, zinc, copper, tin, nickel and, aluminum. Some critics, such as Matt Taibbi, believe that allowing a company to both "control the supply of crucial physical commodities, and also trade in the financial products that might be related to those markets", is "akin to letting casino owners who take book on NFL games during the week also coach all the teams on Sundays".


Unauthorized trades by Goldman Sachs trader Matthew Marshall Taylor

Former Goldman Sachs trader Matthew Marshall Taylor was convicted of hiding $8.3 billion worth of unauthorized trades involving derivatives on the
S&P 500 The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of D ...
index by making "multiple false entries" into a Goldman trading system, with the objective of protecting his year-end bonus of $1.5 million. When Goldman Sachs management uncovered the trades, Taylor was immediately fired. The trades cost the company $118 million, which Taylor was ordered to repay. In 2013, Taylor plead guilty to charges and was sentenced to 9 months in prison in addition to the monetary damages.


Goldman Sachs Commodity Index and the 2005-2008 Food Bubble

Frederick Kaufman, a contributing editor of ''
Harper's Magazine ''Harper's Magazine'' is a monthly magazine of literature, politics, culture, finance, and the arts. Launched in New York City in June 1850, it is the oldest continuously published monthly magazine in the U.S. (''Scientific American'' is older, b ...
'', argued in a 2010 article that Goldman's creation of the Goldman Sachs Commodity Index (now the S&P GSCI) helped passive investors such as pension funds, mutual funds and others engage in food price
speculation In finance, speculation is the purchase of an asset (a commodity, good (economics), goods, or real estate) with the hope that it will become more valuable shortly. (It can also refer to short sales in which the speculator hopes for a decline i ...
by betting on financial products based on the commodity index. These financial products disturbed the normal relationship between
supply and demand In microeconomics, supply and demand is an economic model In economics, a model is a theory, theoretical construct representing economic wikt:process, processes by a set of Variable (mathematics), variables and a set of logical and/or q ...
, making prices more volatile and defeating the price stabilization mechanism of the futures exchange. A June 2010 article in ''
The Economist ''The Economist'' is a British weekly newspaper printed in Paper size#Demitab, demitab format and Electronic publishing, published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in Lo ...
'' defended commodity investors and oil index-tracking funds, citing a report by the
Organisation for Economic Co-operation and Development The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
that found that commodities without futures markets and ignored by index-tracking funds also saw price rises during the period.


Aluminum price and supply

In a July 2013 article, David Kocieniewski, a journalist with ''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid d ...
'' accused Goldman Sachs and other Wall Street firms of "capitalizing on loosened federal regulations" to manipulate "a variety of commodities markets", particularly aluminum, citing "financial records, regulatory documents, and interviews with people involved in the activities". After Goldman Sachs purchased aluminum warehousing company Metro International in 2010, the wait of warehouse customers for delivery of aluminum supplies to their factories - to make beer cans, home siding, and other products - went from an average of 6 weeks to more than 16 months, "according to industry records". "Aluminum industry analysts say that the lengthy delays at Metro International after Goldman took over are a major reason the premium on all aluminum sold in the spot market has doubled since 2010." The price increase has cost "American consumers more than $5 billion" from 2010 to 2013 according to former industry executives, analysts and consultants. The cause of this was alleged to be Goldman's ownership of a quarter of the national supply of aluminum - a million and a half tons - in network of 27 Metro International warehouses Goldman owns in Detroit, Michigan. To avoid hoarding and price manipulation, the London Metal Exchange requires that "at least 3,000 tons of that metal must be moved out each day". Goldman has dealt with this requirement by moving the aluminum - not to factories, but "from one warehouse to another" - according to the Times. In August 2013, Goldman Sachs was subpoenaed by the federal
Commodity Futures Trading Commission The Commodity Futures Trading Commission (CFTC) is an Independent agencies of the United States government, independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures contract, futu ...
as part of an investigation into complaints that Goldman-owned metals warehouses had "intentionally created delays and inflated the price of aluminum". In December 2013, it was announced that 26 cases accusing Goldman Sachs and JPMorgan Chase, the two investment banks' warehousing businesses, and the London Metal Exchange in various combinations - of violating U.S. anti-trust laws, would be assigned to
United States District Court for the Southern District of New York The United States District Court for the Southern District of New York (in case citations, S.D.N.Y.) is a United States district court, federal trial court whose geographic jurisdiction encompasses eight counties of New York (state), New York ...
Judge Katherine B. Forrest in
Manhattan Manhattan (), known regionally as the City, is the most densely populated and geographically smallest of the five Boroughs of New York City, boroughs of New York City. The borough is also coextensive with New York County, one of the List of co ...
. According to Lydia DePillis of Wonkblog, when Goldman bought the warehouses it "started paying traders extra to bring their metal" to Goldman's warehouses "rather than anywhere else. The longer it stays, the more rent Goldman can charge, which is then passed on to the buyer in the form of a premium." The effect is "amplified" by another company,
Glencore Glencore plc is a Swiss Multinational corporation, multinational commodity trading and mining company with headquarters in Baar, Switzerland, Baar, Switzerland. Glencore's oil and gas head office is in London and its registered office is in Sai ...
, which is "doing the same thing in its warehouse in
Vlissingen Vlissingen (; zea, label=Zeelandic, Vlissienge), historically known in English as Flushing, is a Municipalities of the Netherlands, municipality and a city in the southwestern Netherlands on the former island of Walcheren. With its strategic l ...
". Michael DuVally, a spokesman for Goldman Sachs, said the cases are without merit. Columnist Matt Levine, writing for ''
Bloomberg News Bloomberg News (originally Bloomberg Business News) is an international news agency A news agency is an organization that gathers news reports and sells them to subscribing news organizations, such as newspapers, magazines and All-news rad ...
'', described the conspiracy theory as "pretty silly", but said that it was a rational outcome of an irrational and inefficient system which Goldman Sachs may not have properly understood. In December 2014, Goldman Sachs sold its aluminum warehousing business to Ruben Brothers.


Oil futures speculation

Investment banks, including Goldman, have also been accused of driving up the price of
gasoline Gasoline (; ) or petrol (; ) (see ) is a transparent, petroleum-derived flammable liquid that is used primarily as a fuel in most Spark-ignition engine, spark-ignited internal combustion engines (also known as petrol engines). It consists ...
by speculating on the oil futures exchange. In August 2011, "confidential documents" were leaked "detailing the positions" in the oil futures market of several investment banks, including Goldman Sachs,
Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
,
JPMorgan Chase JPMorgan Chase & Co. is an American Multinational corporation, multinational Investment banking, investment bank and financial services holding company headquartered in City of New York, New York City and Delaware General Corporation Law, inco ...
,
Deutsche Bank Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational Investment banking, investment bank and financial services company headquartered in Frankfurt, Frankfurt, Germany, and dual-listed on the Frankfurt Stock ...
, and
Barclays Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services. Barclays traces ...
, just before the peak in gasoline prices in the summer of 2008. The presence of positions by investment banks on the market was significant for the fact that the banks have deep pockets, and so the means to significantly sway prices, and unlike traditional market participants, neither produced oil nor ever took physical possession of actual barrels of oil they bought and sold. Journalist Kate Sheppard of Mother Jones called it "a development that many say is artificially raising the price of crude". However, another source stated that, "Just before crude oil hit its record high in mid-2008, 15 of the world's largest banks were betting that prices would fall, according to private trading data..." In April 2011, a couple of observers - Brad Johnson of the blog Climate Progress, founded by Joseph J. Romm, and Alain Sherter of CBS MoneyWatch - noted that Goldman Sachs was warning investors of a dangerous spike in the
price of oil The price of oil, or the oil price, generally refers to the spot price of a Oil barrel, barrel () of benchmark crude oil—a reference price for buyers and sellers of crude oil such as West Texas Intermediate (WTI), Brent Crude, Dubai Crud ...
. Climate Progress quoted Goldman as warning "that the price of oil has grown out of control due to excessive speculation" in petroleum futures, and that "net speculative positions are four times as high as in June 2008", when the price of oil peaked. It stated that, "Goldman Sachs told its clients that it believed speculators like itself had artificially driven the price of oil at least $20 higher than supply and demand dictate." Sherter noted that Goldman's concern over speculation did not prevent it (along with other speculators) from lobbying against regulations by the Commodity Futures Trading Commission to establish "position limits", which would cap the number of futures contracts a trader can hold, and thus prevent speculation. According to Joseph P. Kennedy II, by 2012, prices on the oil commodity market had become influenced by "hedge funds and bankers" pumping "billions of purely speculative dollars into commodity exchanges, chasing a limited number of barrels and driving up the price". The problem started, according to Kennedy, in 1991, when
just a few years after oil futures began trading on the
New York Mercantile Exchange The New York Mercantile Exchange (NYMEX) is a commodity futures exchange owned and operated by CME Group of Chicago. NYMEX is located at One North End Avenue in Brookfield Place (New York City), Brookfield Place in the Battery Park City sectio ...
, Goldman Sachs made an argument to the
Commodity Futures Trading Commission The Commodity Futures Trading Commission (CFTC) is an Independent agencies of the United States government, independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures contract, futu ...
that Wall Street dealers who put down big bets on oil should be considered legitimate hedgers and granted an exemption from regulatory limits on their trades. The commission granted an exemption that ultimately allowed Goldman Sachs to process billions of dollars in speculative oil trades. Other exemptions followed,
and "by 2008, eight investment banks accounted for 32% of the total oil futures market".


Danish utility sale (2014)

Goldman Sachs's purchase of an 18% stake in state-owned DONG Energy (now Ørsted A/S) - Denmark's largest electric utility - set off a "political crisis" in Denmark. The sale - approved on January 30, 2014 - sparked protest in the form of the resignation of six cabinet ministers and the withdrawal of a party ( Socialist People's Party) from Prime Minister
Helle Thorning-Schmidt Helle Thorning-Schmidt (; born 14 December 1966) is a Danish retired politician who served as the List of Prime Ministers of Denmark, 26th Prime Minister of Denmark from 2011 to 2015, and Leader of the Social Democrats (Denmark), Social Democrat ...
's leftist governing coalition. According to ''
Bloomberg Businessweek ''Bloomberg Businessweek'', previously known as ''BusinessWeek'', is an American weekly business magazine published fifty times a year. Since 2009, the magazine is owned by New York City-based Bloomberg L.P. The magazine debuted in New York City ...
'', "the role of Goldman in the deal struck a nerve with the Danish public, which is still suffering from the after-effects of the global financial crisis". Protesters in
Copenhagen Copenhagen ( or .; da, København ) is the capital and most populous city of Denmark, with a proper population of around 815.000 in the last quarter of 2022; and some 1.370,000 in the urban area; and the wider Copenhagen metropolitan ar ...
gathered around a banner "with a drawing of a vampire squid - the description of Goldman used by Matt Taibbi in Rolling Stone in 2009". Opponents expressed concern that Goldman would have some say in DONG's management, and that Goldman planned to manage its investment through "subsidiaries in Luxembourg, the Cayman Islands, and Delaware, which made Danes suspicious that the bank would shift earnings to tax havens". Goldman purchased the 18% stake in 2014 for 8 billion kroner and sold just over a 6% stake in 2017 for 6.5 billion kroner.


Libya investment losses (2013)

In January 2014, the Libyan Investment Authority (LIA) filed a lawsuit against Goldman for $1 billion after the firm lost 98% of the $1.3 billion the LIA invested with Goldman in 2007. Goldman made more than $1 billion in derivatives trades with the LIA funds, which lost almost all their value but earned Goldman $350 million in profit. In court documents the firm has admitted to having used small gifts, occasional travel and an internship in order to gain access to Libya's sovereign wealth fund. In August 2014, Goldman dropped a bid to end the suit in a London court. In October 2016, after trial, the court entered a judgment in Goldman Sachs's favor.


Improper securities lending practices

In January 2016, Goldman Sachs agreed to pay $15 million after it was found that a team of Goldman employees, between 2008 and 2013, "granted locates" by arranging to borrow securities to settle short sales without adequate review. However, U.S. regulation for short selling requires brokerages to enter an agreement to borrow securities on behalf of customers or to have "reasonable grounds" for believing that it can borrow the security before entering contracts to complete the sale. Additionally, Goldman Sachs gave "incomplete and unclear" responses to information requests from SEC compliance examiners in 2013 about the firm's securities lending practices.


Conspiring to allow $1 billion in bribes to obtain business from 1MDB Malaysian sovereign wealth fund (2015-2020)

In July 2009,
Prime Minister of Malaysia The prime minister of Malaysia ( ms, Perdana Menteri Malaysia; ms, ڤردان منتري مليسيا, label=Jawi alphabet, Jawi, script=arab, italic=unset) is the head of government of Malaysia. The prime minister directs the executive branc ...
Najib Razak Malay styles and titles#Dato' Sri, Dato' Sri Hajj, Haji Mohammad Najib bin Tun Haji Abdul Razak ( ms, محمد نجيب بن عبد الرزاق, label=Jawi alphabet, Jawi, script=arab, italic=unset, ; born 23 July 1953) is a Malaysian peop ...
set up a sovereign wealth fund, 1Malaysia Development Berhad (1MDB). In 2015, U.S. prosecutors began examining the role of Goldman in helping 1MDB raise more than $6 billion. The 1MDB bond deals were said to generate "above-average" commissions and fees for Goldman amounting close to $600 million or more than 9% of the proceeds. Beginning in 2016, Goldman was investigated for a $3 billion bond created by the bank for 1MDB. U.S. Prosecutors investigated whether the bank failed to comply with the Bank Secrecy Act, which requires financial institutions to report suspicious transactions to regulators. In November 2018, Goldman's former chairman of Southeast Asia, Tim Leissner, admitted that more than US$200 million in proceeds from 1MDB bonds went into the accounts controlled by him and a relative, bypassing the company's compliance rules. Leissner and another former Goldman banker, Roger Ng, together with Malaysian financier Jho Low were charged with money laundering. Goldman chief executive David Solomon felt "horrible" about the ex-staff breaking the law by going around the policies and apologized to Malaysians for Leissner’s role in the 1MDB scandal. On December 17, 2018, Malaysia filed criminal charges against subsidiaries of Goldman and their former employees Leissner and Ng, alleging their commission of misleading statements in order to dishonestly misappropriate US$2.7 billion from the proceeds of 1MDB bonds arranged and underwritten by Goldman in 2012 and 2013. On July 24, 2020, it was announced that the Malaysian government would receive US$2.5 billion in cash from Goldman Sachs, and a guarantee from the bank they would also return US$1.4 billion in assets linked to 1MDB bonds. Put together this was substantially less than the US$7.5 billion that had been previously demanded by the Malaysian finance minister. At the same time, the Malaysian government agreed to drop all criminal charges against the bank and that it would cease legal proceedings against 17 current and former Goldman directors. Some commentators argued that Goldman secured a very favorable deal. In October 2020, the Malaysian subsidiary of Goldman Sachs admitted to mistakes in auditing its subsidiary and agreed pay more than $2 billion in fines.


Purchase Petróleos de Venezuela bonds (2017)

In May 2017, Goldman Sachs purchased $2.8 billion of PDVSA 2022 bonds from the Central Bank of Venezuela during the 2017 Venezuelan protests, when the country was suffering from malnutrition and hyperinflation. In its original statement, Goldman stated that “We recognize that the situation is complex and evolving and that Venezuela is in crisis. We agree that life there has to get better, and we made the investment in part because we believe it will.”. Venezuelan politicians and protesters in New York opposed to Maduro accused the bank of being of complicit of human rights abuses under the government and declared that the operation would fuel hunger in Venezuela by depriving the government of foreign exchange to import food, leading the securities to be dubbed “hunger bonds.” The opposition-led
National Assembly In politics, a national assembly is either a unicameral legislature, the lower house of a bicameral legislature, or both houses of a bicameral legislature together. In the English language it generally means "an assembly composed of the repre ...
voted to ask the U.S. Congress to investigate the deal, which they called "immoral, opaque, and hypocritical given the socialist government’s anti-Wall Street rhetoric". In a public letter to the bank’s chief executive, Lloyd Blankfein, the National Assembly president Julio Borges said that “Goldman Sachs’s financial lifeline to the regime will serve to strengthen the brutal repression unleashed against the hundreds of thousands of Venezuelans peacefully protesting for political change in the country." Sheila Patel, CEO of Goldman Sachs Asset Management’s international division, said in an interview that the incident "turned into a teachable moment within the firm" and "helped sharpen its focus on investing with an eye toward environmental, social and governance policies".


Work culture

In 2021, Goldman faced scrutiny after a group of first year bankers told managers that they are working 100 hours a week with 5 hours sleep at night. They also said that they have been constantly experiencing workplace abuse that has seriously affected their mental health. In May 2022, Goldman Sachs announced that they would be implementing a more flexible vacation policy to help their employees 'rest and recharge' where they give senior bankers unlimited vacation days, and all employees are expected to have a minimum of 15 days vacation every year.


Political contributions

Goldman Sachs employees have donated to both major American political parties, as well as candidates and super PACs belonging to both parties. According to
OpenSecrets OpenSecrets is a nonprofit organization based in Washington, D.C., that tracks data on campaign finance and lobbying. It was created from a merger of the Center for Responsive Politics (CRP) and the National Institute on Money in Politics (NIMP). ...
, Goldman Sachs and its employees collectively gave $4.7 million in the 2014 elections to various candidates, leadership PACs, political parties, 527 groups, and outside spending entities. In 2010, the
Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agencies of the United States government, independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary pu ...
issued regulations that limit asset managers' donations to state and local officials, and prohibit certain top-level employees from donating to such officials.Sara Sjolin
Why Goldman Sachs staff can donate to Hillary Clinton but not Donald Trump
, ''MarketWatch'' (September 7, 2016).
This SEC regulation is an anti-"pay-to-play" measure, intended to avoid the creation of a
conflict of interest A conflict of interest (COI) is a situation in which a person or organization is involved in multiple wikt:interest#Noun, interests, finance, financial or otherwise, and serving one interest could involve working against another. Typically, t ...
, or the appearance of a conflict of interest, as Goldman Sachs has business in managing state
pension fund A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or scheme which provides pension, retirement income. Pension funds typically have large amounts of money to invest and are the major investors in listed a ...
s and municipal debt. In 2016, Goldman Sachs's compliance department barred the firm's 450 partners (its most senior employees) from making donations to state or local officials, as well as "any federal candidate who is a sitting state or local official". One effect of this rule was to bar Goldman partners from directly donating to
Donald Trump Donald John Trump (born June 14, 1946) is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021. Trump graduated from the Wharton School of the University of Pe ...
's presidential campaign, since Trump's running mate,
Mike Pence Michael Richard Pence (born June 7, 1959) is an American politician who served as the 48th vice president of the United States from 2017 to 2021 under President Donald Trump. A member of the Republican Party (United States), Republican Party, ...
, was the sitting
governor of Indiana The governor of Indiana is the head of government of the State of Indiana. The Governor (United States), governor is elected to a four-year term and is responsible for overseeing the day-to-day management of the functions of many Government agenc ...
. Donations to
Hillary Clinton Hillary Diane Rodham Clinton ( Rodham; born October 26, 1947) is an American politician, diplomat, and former lawyer who served as the 67th United States secretary of state, United States Secretary of State for President Barack Obama from 2009 ...
's presidential campaign were not barred by the policy, since neither Clinton nor her running mate
Tim Kaine Timothy Michael Kaine (; born February 26, 1958) is an American lawyer and politician serving as the Seniority in the United States Senate, junior United States Senate, United States senator from Virginia since 2013. A member of the Democratic ...
was a sitting state or local official. In the 2016 election cycle, Goldman employees were reported () to have donated $371,245 to the
Republican National Committee The Republican National Committee (RNC) is a U.S. Political action committee, political committee that assists the Republican Party (United States), Republican Party of the United States. It is responsible for developing and promoting the Republi ...
and $301,119 to the Hillary Clinton presidential campaign.


Management


Officers and directors

Notable current non-employee members of the
board of directors A board of directors (commonly referred simply as the board) is an Committee#Executive committee, executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such a ...
of the company are M. Michele Burns, Bill George, James A. Johnson, Ellen J. Kullman, Lakshmi Mittal, Adebayo Ogunlesi, Peter Oppenheimer, Debora Spar, Mark Tucker, and David Viniar. Non-employee directors receive annual compensation of $450,000-$475,000. The company's officers are listed on its website as follows:


List of chairmen and CEOs

# Marcus Goldman (1869–1894) # Samuel Sachs (1894–1928) # Waddill Catchings (1928–1930) # Sidney Weinberg (1930–1969) # Gus Levy (1969–1976) # John C. Whitehead and John L. Weinberg (1976–1985) # John L. Weinberg (1985–1990) # Robert Rubin (1990–1992) # Stephen Friedman (1992–1994) # Jon Corzine (1994–1998) #
Henry Paulson Henry Merritt Paulson Jr. (born March 28, 1946) is an American banker and financier who served as the 74th United States Secretary of the Treasury from 2006 to 2009. Prior to his role in the Department of the Treasury, Paulson was the Chairman ...
(1999–2006) # Lloyd Blankfein (2006–2018); Senior Chairman (2019–present) # David M. Solomon (2018–present)


Goldman Sachs research papers

The following are notable Goldman Sachs research papers: * Global Economics Paper No: 93 (South Africa Growth and Unemployment: A Ten-Year Outlook): Makes economic projections for
South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. It is bounded to the south by of coastline that stretch along the Atlantic Ocean, South Atlantic and Indian Oceans; to the ...
for the next 10 years. Published on May 13, 2003. * Global Economics Paper No: 99 (Dreaming With BRICs: The Path to 2050): Introduced the
BRIC BRIC is a grouping acronym An acronym is a word or name formed from the initial components of a longer name or phrase. Acronyms are usually formed from the initial letters of words, as in ''NATO'' (''North Atlantic Treaty Organization'') ...
concept, which became highly popularized in the media and in economic research from this point on. It also made economic projections for 2050 for the G7 and South Africa as well. These were the first long-term economic projections covering the GDP of numerous countries. Published on October 1, 2003. * Global Economics Paper No: 134 (How Solid are the BRICs): Introduced the Next Eleven concept. Published on December 1, 2005. * Global Economics Paper No: 173 (New EU Member States - A Fifth BRIC?): Makes 2050 economic projections for the new European Union, EU member states as a whole. Published on September 26, 2008. * Global Economics Paper No: 188 (A United Korea; Reassessing North Korea Risks (Part I)): Makes 2050 economic projections for North Korea in the hypothetical event that North Korea makes large free-market reforms right now. Published on September 21, 2009. * The Olympics and Economics 2012: Makes projections for the number of gold medals and told Olympic medals that each country wins at the 2012 Olympics using economic data and previous Olympic data. Published in 2012.


See also

* List of former employees of Goldman Sachs


References


Further reading

* * William D. Cohan, Cohan, William D. (2011). ''Money and Power, Money and Power: How Goldman Sachs Came to Rule the World'' * * * * * * *


External links

* * Archived a
Ghostarchive
and th
Wayback Machine
{{Authority control Goldman Sachs, Companies listed on the New York Stock Exchange 1869 establishments in New York (state) Banks established in 1869 Financial services companies established in 1869 Banks based in New York City Systemically important financial institutions Companies based in Manhattan Companies in the Dow Jones Industrial Average Investment banks in the United States Multinational companies based in New York City Primary dealers Publicly traded companies based in New York City Subprime mortgage crisis Subprime mortgage lenders 1999 initial public offerings