Tue, May 22, 2018
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. News Briefs - Warren Buffett: Target date funds aren't the way to go, Cambridge Analytica could be reborn under a different name[more]

    Warren Buffett: Target date funds aren't the way to go Planning for retirement can be complicated and stressful. This is why target date funds - funds that are managed based on when you expect to retire - are so attractive. Over time, the balance of stocks, bonds and cash evolve automati

  2. Investing - Hedge funds hike Smurfit Kappa positions amid takeover deal hopes, Hedge fund IBV Capital digs deep to unlock long-term value in a competitive market, Eisman of 'The Big Short' fame recommends shorting Deutsche Bank[more]

    Hedge funds hike Smurfit Kappa positions amid takeover deal hopes From Irishtimes.com: Two US hedge funds, Davidson Kempner and York Capital, have accumulated a combined 4.74 per cent interest in cardboard box maker Smurfit Kappa using financial derivatives. It comes as many investors cl

  3. Foundations of hedge fund managers gave big to controversial donor-advised funds[more]

    In the world of philanthropy and tax-deductible charitable giving, the explosion of donor-advised funds has touched off intense debate. Now, there is evidence that the DAF boom is being further fuelled by hedge fund foundation money. Four of the top five foundations that gave the most to large do

  4. Study: For hedge funds, smaller is better[more]

    From Institutionalinvestor.com: The smaller the hedge fund is, the better its performance is likely to be, according to a new study. The study - "Size, Age, and the Performance Life Cycle of Hedge Funds," released April 26 - sought to determine whether a hedge fund's size and age had any effect on i

  5. Hedge fund returns rose in April for first gain since January[more]

    From Bloomberg.com: Bloomberg Hedge Fund Database shows returns flat this year - Currency strategies had the biggest monthly gain at 13% Hedge fund returns increased 0.78 percent in April, reversing two consecutive monthly declines. The swing of 134 basis points was driven by gains in all seven