The boss of Goldman Sachs's chief rival, JPMorgan, has warned his staff not to make capital out of his competitor's discomfit despite the damning resignation letter of Goldman executive Greg Smith continuing to be the talk of Wall Street.
Jamie Dimon, chief executive of JPMorgan Chase, circulated a memo telling staff they should make no reference to Mr Smith's sensational letter, which was published in Wednesday's New York Times, however tempting it may be to use it to woo clients away from Goldman.
Mr Smith's letter described a "toxic" culture at Goldman where traders were encouraged to rip off their clients instead of looking out for their best interests.
The letter "is generating a lot of discussion around the street", Mr Dimon wrote. "I want to be clear that I don't want anyone here to seek advantage from a competitor's alleged issues or hearsay – ever. It's not the way we do business. We respect our competitors, and our focus should be on doing the best we can to continually strengthen our own standards."
Mr Smith spent 12 years at Goldman, in charge of trading US equity derivatives from the bank's London office and one of a cadre of executives drafted to mentor new recruits. He described collapsing moral standards at the bank, alleging that young traders referred to clients as "muppets" and delighted in "ripping their face off" – that is, making very large profits out of them.
Goldman characterised him as "disgruntled", saying he was one among 12,000 vice-president level employees and that his views did not reflect the reality of the firm. With the incident knocking more than $2bn off the value of the company and in a sign of concern at the very top of the firm over the effect on relations with clients, Goldman chief executive Lloyd Blankfein penned a memo to staff that emphasised its "client-driven culture".
Goldman shares yesterday recovered some of their losses, and were trading up 2.4 per cent at lunchtime in New York.
Meanwhile, the resignation letter continued to generate intense debate, over whether he had made any substantial revelations, whether Goldman had done enough to reassure clients and over the wisdom and motives of Mr Smith's decision to express his views in such an explosive way.
South Africa-born Mr Smith's old schoolteacher weighed in with his recollections, calling his former student a person of unequalled integrity.
Elliot Wolf, retired headmaster of the private King David's High School in suburban Johannesburg, told Reuters: "He was a remarkable young man, exceptionally intelligent with an integrity that is probably unequalled. He was a wonderful young man with the highest principles. That was already part of his character when he was very, very young."
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