JPMorgan staff told go easy on Goldman's Muppetgate

LONDON/HONG KONG Thu Mar 15, 2012 2:21pm GMT

Jamie Dimon, CEO and chairman of JPMorgan Chase & Co., poses for a portrait in his office in New York, in this photo taken December 22, 2010. REUTERS/Lucas Jackson

Jamie Dimon, CEO and chairman of JPMorgan Chase & Co., poses for a portrait in his office in New York, in this photo taken December 22, 2010.

Credit: Reuters/Lucas Jackson

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LONDON/HONG KONG (Reuters) - Investment bank JPMorgan tried to contain damage to Wall Street's reputation on Thursday by telling staff not to try to profit from rival Goldman Sachs' embarrassment over a vitriolic resignation letter published in the New York Times.

Equity derivatives salesman Greg Smith caused a firestorm across the banking industry on Wednesday with the letter, published as an opinion column and calling Goldman (GS.N) a "toxic" place to work where senior staff saw clients as "muppets".

JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon warned employees in an internal memo not to seek advantage from Goldman's "alleged issues", imploring them focus on standards, not on the furore stirred by Smith in what media and bloggers have called "Muppetgate".

"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," Dimon said in the memo, a copy of which was seen by Reuters.

Dimon's memo, awaiting Asia employees in their e-mail inboxes on Thursday morning, was sent to the bank's global operating committee and later forwarded to wider parts of JPMorgan, said sources who have seen the memo.

JPMorgan declined to comment.

London-based Smith, who had worked for Goldman for almost 12 years, called the bank a "toxic and destructive" place.

"It makes me ill how callously people talk about ripping their clients off," he said in the letter. "Over the last 12 months I have seen five different managing directors refer to their own clients as 'muppets'."

The storm goes to the heart of the reputational crisis in investment banking since public opinion started blaming the industry for its role in the 2008 banking crisis which brought the global financial system close to collapse.

"This could be just a disgruntled employee, but it comes at a time when the industry is not having a great time," said a senior mergers and acquisitions adviser. "Franchises can be affected by things like this," this person said.

Goldman said in its official response on Wednesday that the bank disagreed with the views expressed by Smith, "which we don't think reflect the way we run our business."

With the whole industry in a brighter spotlight since 2008, Goldman has faced a series of incidents that threaten to tarnish its image in particular.

Earlier this month accused of a conflict of interest for advising El Paso Corp on its sale to Kinder Morgan, in which the bank was a significant shareholder.

Sources at banks including Citi (C.N), Credit Suisse (CSGN.VX) and Nomura (9716.T) said they were not aware of any memo similar to Dimon's at their respective firms.


Insider: Short-term culture

Felix Salmon: Smith's ballad

Graphic: Recent woes

Graphic: Stock timeline

Graphic: Blankfein pay

Link: Smith op-ed piece:</A1


Link: Goldman response:

Link: Famous resignations: here



While Goldman Sachs is attempting to play down the Smith letter, the firm's shares fell 3.4 percent in trading in New York on Wednesday, and its impact has become a topic of discussion among its employees.

"It's definitely got people talking in the office," said an Asia-based Goldman Sachs trader who did not want to be named.

"It's amusing honestly because perceptions depend on the individual. For every one person who has something malicious to say about the company, you'll find 10 others who have a 180 (degrees different) view," the trader said.

Several former Goldman Sachs employees who worked at the company before its initial public offering said the firm's culture did change after it got listed, as Smith alleges, with bankers increasingly under the gun to boost profit.

"The culture definitely has changed since I was there," said property developer SOHO China CEO Zhang Xin, who worked at Goldman Sachs some 20 years ago and now is a client of the firm.

"Since the company went public there's this pressure on earnings," Xin said.

But two Goldman Sachs clients who work at different hedge funds both said that the criticisms that Smith levels at Goldman's corporate culture could equally apply to its rivals.

"If clients want to start awarding business to nicer, friendlier banks that would be great. But I don't think that is going to happen," said one industry insider.

(Reporting by Nishant Kumar, Clement Tan, Lawrence White and Alex Frew McMillan in HONG KONG, Emi Emoto in TOKYO, Narayanan Somasundaram in SYDNEY, Sumeet Chatterjee in MUMBAI and Victoria Howley in London.; Writing by Michael Flaherty and Douwe Miedema; Editing by Edmund Klamann and Andrew Callus)

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Comments (3)
racingintime wrote:
“From a trading perspective, the coverage is good, the execution is good, and that’s what matters to us. We go into a relationship with eyes wide open.”

Yet its the customer end customer who should count as they are where the money for traders to invest comes from.

Mar 15, 2012 10:59am GMT  --  Report as abuse
Herby wrote:
The comment;

“It’s definitely got people talking in the office,” said an Asia-based trader inside Goldman Sachs who did not want to be named.

Makes me giggle, the secret code of bankers to silence and not to ever talk to the press has been broken.

Very clever, maybe this can snowball and break the banks from the inside as the attacks from outside are not working.

I would suggest the carrots which have always kept bankers true to the silence code which are a nod and wink job in the first place followed by huge salaries will suffice and this story will be gone in a week but maybe not?

Ironically the ‘Muppets’ getting ripped off are probably pension fund managers so the likes of you and me are the losers.

The old saying “what you(they) don’t know can’t hurt” has always been the banks motto, well hopefully oneday soon it will implode on all of them, lots of bankers watching their own backs right now which will hopefully lead to more headlines like this, tahts the problem with a secret code like this, when people don’t know if they are about to get stitched up and they have everything to loose they go into defence and/or attack mode.

Mar 15, 2012 11:18am GMT  --  Report as abuse
Pablito wrote:
Wishful thinking…this will have no long term impact what so ever and in 10-14 days we will be on to the next story while this one will be long forgotten. Society is like a gold fish with a ten second memory span.

Mar 15, 2012 2:48pm GMT  --  Report as abuse
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