Goldman Sachs Group Inc., an American multinational investment banking firm, is amending its policy on their employees' conflict of interest thereby prohibiting investment bankers from trading individual stocks and bonds.
The bank's employees were given notice of the change today and is effective immediately. This matter has not been made public by the firm. The anonymous source disclosed that they are not also allowed to invest in activist or even event-driven hedge funds. This change is aimed to reduce potential future conflicts with clients and to protect the reputation of the firm.
The previous practice of bankers was that they needed approval from Compliance before they could invest privately in stocks.
Goldman Sachs Group Inc. is a New York based firm what engages in investment banking, wealth management, securities and financial services. It is known as one of the elite investment banks in the world but has sparked a number of controversy over its alleged improper practices, including their participation on the global financial crisis last 2007.
This new policy is following the case of a former examiner who was fired in 2012 when she refused to amend her findings on the conflict-of-interest policy of Goldman Sachs. Reports by radio and ProPublica were featured on the ex-Federal Reserve Bank of New York examiner's recordings of her former colleagues' dealings with the firm, Goldman Sachs.
The change that happened today tightens a policy that was adjusted after the issue on the Kinder Morgan deal.
Carmen Segarra, the former examiner, sued the New York Fed last year and in April, her case was dismissed.
At that time, the judge rebuked Goldman Sachs over its "incomplete and inadequate" handling of a conflict of interest in pipeline operator Kinder Morgan Inc. The latter's $21.1 billion purchase of El Paso Corp. is the bank's biggest takeover assignment in that year. According to the Delaware judge, a former Goldman Sachs partner, Stephen Daniel, who was leading the deal, failed to disclose ownership of around $340,000 in Kinder Morgan stock.
