Thu, Oct 23, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

DMA: A lesson from the Goldman case: "Shut Up!"

Monday, April 19, 2010
Opalesque Industry Update - Getting a Better Handle on E‐mail Communications

Whatever the merits of the SEC case against Goldman Sachs, one thing is clear from the complaint: a significant basis of the SEC's position revolves around sloppy and unprofessional e‐mail traffic. There is no need to belabor this point: Sloppy, thoughtless, and "cute" e‐mails can create impressions that can cost a firm (or an employee) dearly.

Here are some suggestions for internal policies that go beyond the use of swear words and the typical hot list of problematic terms:

1. Editorializing. Employees should not editorialize in e‐mails (whether about the merits of a deal or the conditions of the current market that might affect a deal, among other things). Any editorializing should be done in a proper forum and through proper organs of the firm, and or should be accompanied by appropriate hedging language.

2. Showboating. A certain gentlemen at Goldman referred to himself as "fabulous," where his "fabulousness" would be proven‐out at the the possible expense of investors. Showboating, especially by an officer of a firm, may be at the expense of the firm. Just what is showboating? Just read the complaint, and go back and listen to the Enron trader tapes. Each firm will have to work‐out its own standards, but certainly celebrating one's own prowess at the expense of clients is an easy mark.

3. E‐mail Signatures. Though it may be of limited utility, global e‐mail signatures might be amended to state that "opinions expressed by the sender of this e‐mail should not necessarily be construed as representing the opinion of the firm, any of its affiliates, or any issuer discussed herein, and certain opinions expressed may be based upon limited knowledge of the facts and circumstances of the matters about which the opinion is addressed." Again, this may be of limited help in a crisis (just like other statements in e‐mail signatures), but it is better than nothing.

4. Conflict of Interest Reviews. Firms should consider expanding the use of conflict of interest questionnaires and inquiries in connection with deals. Compliance Officers and Risk Officers need to brainstorm about the types of conflicts of interest that can arise from deal to deal and product to product. This would be a good risk management exercise for any firm, regardless of size.

5. Professionalism Reviews. In conjunction with points 1 and 2, above, those charged with reviewing emails should assess them based upon the level of professionalism exhibited. Too subjective? Maybe, but internal, written standards can serve as a guide. If this is made part of e‐mail review policies of the firm, it will alert employees that their business communications are under an assortment of modal reviews.


David E. McClean, Principal - David E. McClean & Associates // DMA - Corporate website.


See today’s related article: SEC files civil fraud suit against Goldman Sachs in connection with selling of synthetic CDO which Paulson & co was shorting Source.


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   

Banner

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Commodities - Oil wreaking havoc on small-cap energy stocks sliding 36%[more]

    From Bloomberg.com: Owning almost anything in the U.S. stock market has been a losing proposition since September. Owning smaller energy companies has been a catastrophe. Hercules Offshore Inc. and Resolute Energy Corp. are among 19 oil-and-gas equities in the Russell 2000 Index that lost more than

  2. Investing - Hedge funds favor equity long/short, Strategic bond managers hedge against further high yield sell-off[more]

    Hedge funds favor equity long/short From Securitieslendingtimes.com: Equity long/short strategies will generate good returns for hedge funds in the future, according to a panel at this year’s Risk Management Association Conference on Securities Lending in Naples, Florida. Panellists Sand

  3. Legal - Ex-hedge fund analyst weeps as judge hands down 5 year sentence, Former Columbus investment manager Steven P. Moore indicted on theft charges, SEBI confirms ban for Hong Kong hedge fund, SEC announces enforcement action against compliance officer[more]

    Ex-hedge fund analyst weeps as judge hands down 5 year sentence From Hereisthecity.com: An ex-hedge fund analyst was sentenced to 5 years in prison for his role in insider-trading scheme. The New York Post reports that former hedge fund analyst Matthew Teeple was sentenced Thursday to fiv

  4. Goldman in talks to acquire IndexIQ[more]

    From Bloomberg.com: Can Goldman Sachs put ETF investors on a liquid diet? Goldman is in talks to acquire IndexIQ, Reuters has reported. Index IQ is a small exchange-traded-fund firm known mostly for products that replicate hedge fund strategies, called "liquid alternative" ETFs. While IndexIQ has 11

  5. Other Voices: CALPERS dilemma should be a warning to hedge funds wanting institutional investors[more]

    From Ian Hamilton, founder of IDS Group. A quick comment on the CALPERS’ disinvestment from the hedge fund market and the jitters it is causing. Pension Funds should not be sheep and follow CALPERS’ decision as the issues that CALPERS has with hedge fund investments are in many ways unique t