Mon, Jan 26, 2015
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   |   
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. Investing - U.S. investors favor currency hedged Europe ETFs as euro tumbles, Quants win back investors as Swiss franc fuels volatility gains, David Einhorn's $7bn hedge fund is loading up on this stock, Hedge fund BlueMountain Capital unveils Ocwen Financial short, claims default on notes[more]

    U.S. investors favor currency hedged Europe ETFs as euro tumbles From Reuters.com: U.S. investors stung by the falling euro who want to stay invested in Europe are turning to exchange-traded funds designed to strip out the impact of the region's currency. The biggest among so-called "cur

  2. News Briefs - Millennials use tech tools to jump into investing, Winklevoss twins to launch bitcoin exchange with FDIC insured deposits, Robertson’s legacy from hedge funds to New Zealand, Real estate managers exploring smaller open-end funds[more]

    Millennials use tech tools to jump into investing It is the Facebookification of monetary investing. From social networking platforms that enable young investors to stick to every other's stock-picking mojo, to internet sites for initially-timers hungry for a piece of the Silicon Valley

  3. Top performing private equity firms you should invest in[more]

    Komfie Manalo, Opalesque Asia: Professor Oliver Gottschalg of Paris-based HEC Business School, also known as Ecole des Hautes Etudes Commerciales de Paris has released his annual ranking of the top performing private equity firms. The 2014 HEC-DowJones Private Equity Performance Ranking

  4. Comment - Why invest in hedge funds if they don't outperform the market?[more]

    From Forbes.com: Hedge funds have always been a bit exotic and an enigma to some, but bottom line they are supposed to produce good returns using a range of strategies including global macro, event driven and relative value (arbitrage). And, sophisticated or high-net-worth individuals (HNWIs) could

  5. Owen Li 'truly sorry' for blowing up $100m of hedge fund’s assets[more]

    From CNBC.com: A hedge fund manager told clients he is "truly sorry" for losing virtually all their money. Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm's capital—down from the roughly $100 million it ran as of late March. "I take r