A survey of Goldman Sachs’ (NYSE: GS) business practices suggests that the vast majority of clients want the firm’s chairman and chief executive officer, Lloyd Blankfein, to remain in both jobs despite earlier calls to split his duties, the Fox Business Network has learned.
The study, conducted for Goldman by the Boston Consulting Group, was launched in the summer as the firm faced widespread criticism over its business practices, including a wide-ranging civil probe by the Securities and Exchange Commission over whether Goldman failed to properly disclose key pieces of information to clients to whom it sold mortgage-related debt that ultimately turned sour. Goldman later settled the case by paying a $550 million fine without admitting or denying wrongdoing.
But according to a person who reviewed the survey’s findings, while there were some criticisms, senior management at Goldman, including Bankfein and his No. 2 Gary Cohn, overall received “very strong support” on many client-related issues. Criticism of management, including calls for Blankfein to relinquish his job as chairman, wasn’t “statistically significant,” this person said.
To be sure, details of the survey remain sketchy as the firm continued to compile the data and work through the findings with its auditors and primary regulators at the Federal Reserves. Goldman plans to release the data in the form of a report sometime early next year, possibly in January. A spokesman for Goldman would neither confirm nor deny the findings.
Over the past year, corporate governance experts increasingly called on Goldman’s board to split Blankfein’s role so that a separate chairman could oversee issues as they relate to the firm’s treatment of clients, while Blankfein could spend his time running the firm. Goldman has spent the better part of the past year defending itself from allegations that it takes advantage of its clients. In the SEC case, two Goldman clients said they were unaware that a short seller –who made a bundle betting the investment they purchased would fail—actually helped create the investment in the first place.
During Congressional testimony in April, e-mails surfaced that showed Goldman executives actively discussing how the firm was selling clients “shitty” deals.
Earlier in the year, the firm shareholders voted to allow Blankfein to remain as chairman and CEO.
But FBN has learned that one reason why the firm’s clients may be giving Blankfein what seems like a similar vote of confidence is because they weren’t specifically asked about the matter. According to a person with direct knowledge of the survey, senior Goldman executives who hired the Boston Consulting Group believed such a question about Blankfein’s dual role is “irrelevant,” because shareholders voted already to keep Blankfein in both roles.
Goldman is one of the few major Wall Street banks that doesn’t have a separate CEO and chairman. The other is JP Morgan, which is also coming under pressure to split the role.
“People could have raised the issue, but it didn’t come up in a statistically significant way.”
A spokeswoman for the Boston Consulting Group had no comment.
The survey stems from a new committee formed inside Goldman to deal with business standards. Blankfein, for his part, has apologized for Goldman’s behavior though the firm has steadfastly maintained that it has done nothing illegal.