[A-List] Goldman_Sachs
Charles Brown
cbrown at michiganlegal.org
Thu Apr 12 08:36:53 MDT 2007
________________________________
Goldman Sachs
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The Goldman Sachs Group
Goldman Sachs logo
<http://upload.wikimedia.org/wikipedia/en/1/1d/LogoGS.gif>
Type Public (NYSE: GS
<http://www.nyse.com/about/listed/lcddata.html?ticker=GS> )
Founded 1869
Headquarters
<http://upload.wikimedia.org/wikipedia/commons/thumb/a/a4/Flag_of_the_United
_States.svg/20px-Flag_of_the_United_States.svg.png> New York, New York
Key people Lloyd Blankfein, Chairman & CEO
Gary Cohn, President & COO
Jon Winkelried, President and COO
Suzanne M. Nora Johnson, Vice Chairman
David A. Viniar, CFO
Edward C. Forst, CAO
Gregory K. Palm, General Counsel
Esta E. Stecher, General Counsel
Kevin W. Kennedy, Head of Human Capital Management
Alan M. Cohen, Global Head of Compliance
Industry Finance and Insurance
Products Investment Banking
Revenue
<http://upload.wikimedia.org/wikipedia/commons/thumb/8/8b/Green_Arrow_Up_Dar
ker.svg/10px-Green_Arrow_Up_Darker.svg.png> US $37.67 Billion (2006)
Net income
<http://upload.wikimedia.org/wikipedia/commons/thumb/8/8b/Green_Arrow_Up_Dar
ker.svg/10px-Green_Arrow_Up_Darker.svg.png> US $9.54 Billion (2006)
Employees 30,335 (2006)
Slogan Our clients' interests always come first.
Website www.gs.com <http://www.gs.com/>
Goldman Sachs offices at the Fraumünsterplatz in Zürich (the light-colored
building on the left)
<http://upload.wikimedia.org/wikipedia/commons/thumb/6/62/Z%C3%BCrich.Fraum%
C3%BCnsterplatz.jpg/255px-Z%C3%BCrich.Fraum%C3%BCnsterplatz.jpg>
Goldman Sachs offices at the Fraumünsterplatz in Zürich (the light-colored
building on the left)
The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS
<http://www.nyse.com/about/listed/lcddata.html?ticker=GS> ) is one of the
world's largest global investment banks. Goldman Sachs was founded in 1869,
and is headquartered in the Lower Manhattan area of New York City at 85
Broad Street.[1] Goldman Sachs has offices in leading financial centers such
as New York City, Chicago, Los Angeles, San Francisco, Frankfurt, Zürich,
Paris, London, Bangalore, Mumbai, Hong Kong, Beijing, Singapore, Salt Lake
City, Dubai, Milan, Sydney, Tokyo, Moscow and Toronto.
Goldman Sachs acts as a financial adviser to some of the most important
companies, largest governments, and wealthiest families in the world. It is
a primary dealer in the U.S. Treasury securities market. Goldman Sachs
offers its clients mergers & acquisitions advisory, provides underwriting
services, engages in proprietary trading, invests in private equity deals,
and also manages the wealth of affluent individuals and families.
Contents
* 1 Company Overview
* 2 Businesses
* 3 Predictions
* 4 History
* 5 Corporate Citizenship
* 6 Criticism and Controversy
* 7 See also
* 7.1 Competitors
* 8 Other Notable Alumni
* 9 References
* 10 External links
* 10.1 Data
* 10.2 Litigation
[edit] Company Overview
As of 2006, Goldman Sachs employed 26,500 people worldwide. It reported
earnings of US$9.54 billion and record earnings per share of $19.69.[2] It
was reported that the average total compensation per employee in 2006 was
US$622,000.[3] The current Chief Executive Officer is Lloyd C. Blankfein.
[edit] Businesses
Goldman Sachs is divided into three core businesses (segments): Investment
Banking; Trading; and Asset Management and Securities Services.
Investment Banking is divided into two divisions and includes Financial
Advisory (mergers and acquisitions, investitures, corporate defense
activities, restructurings and spin-offs) and Underwriting (public offerings
and private placements of equity, equity-related and debt instruments).
Goldman Sachs is one of the leading investment banks, appearing in league
tables. In mergers and acquisitions, it gained fame historically by advising
clients on how to avoid hostile takeovers. Goldman Sachs, for a long time
during the 1980s, was the only major investment bank with a strict policy
against helping to initiate a hostile takeover, which increased Goldman's
reputation immensely. This segment accounts for around 15 percent of Goldman
Sach's revenues.
Trading and Principal Investments is the largest of the three core segments,
and is the company's profit center. The segment is divided into three
divisions and includes Fixed Income, Currency and Commodities (trading in
interest rate and credit products, mortgage-backed securities and loans,
currencies and commodities, structured and derivative products), Equities
(trading in equities, equity-related products, equity derivatives,
structured products and executing client trades in equities, options, and
Futures contracts on world markets), and Principal Investments (merchant
banking investments and funds). This segment consists of the revenues and
profit gained from the Bank's trading activities, both on behalf of its
clients (known as flow trading) and for its own account (known as
proprietary trading).
Most trading done by Goldman is not speculative, but rather an attempt to
profit from bid-ask spreads in the process of acting as a market maker.
Around 65 percent of Goldman's revenues and profits are derived from this
area. Upon its IPO, Goldman predicted that this segment would not grow as
fast as its Investment Banking division and would be responsible for a
shrinking proportion of earnings. The opposite has been true, however, and
resulted in Lloyd Blankfein's appointment to President and Chief Operating
Officer after John Thain's departure to run the NYSE and John L. Thornton's
departure for an academic position in China.
Asset Management and Securities Services is a rapidly growing business for
Goldman as it gains market share. It is divided into two divisions, and
includes Asset Management which provides large institutions and very wealthy
individuals with investment advisory, financial planning services, and the
management of mutual funds, as well as the so-called alternative investments
(hedge funds, funds of funds, real estate funds, and private equity funds).
The Securities Services division provides prime brokerage, financing
services, and securities lending to mutual funds, hedge funds, pension
funds, foundations, and high-net-worth individuals. This segment accounts
for around 19 percent of Goldman's earnings. As of 2006, the Goldman Sachs
Asset Management hedge fund is the largest in the United States with $29.5
billion under management.[4]
GS Capital Partners is the private equity arm of Goldman Sachs. It has
invested over $17 billion in the 20 years from 1986 to 2006. The most
prominent fund is the GS Capital Partners V fund, which comprises over $8.5
billion of equity.[5]
[edit] Predictions
In December 2005, four years after its report on the emerging "BRIC"
economies (Brazil, Russia, India, and China), Goldman Sachs named its "Next
Eleven" list of countries, using macroeconomic stability, political
maturity, openness of trade and investment policies and quality of education
as criteria: Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico,
Nigeria, Pakistan, the Philippines, Turkey and Vietnam.[6]
[edit] History
Goldman Sachs was founded in 1869 by Marcus Goldman.[7] Goldman made a name
for itself pioneering the use of commercial paper for entrepreneurs and was
invited to join the New York Stock Exchange in 1896. It was during this time
that Goldman's son-in-law Samuel Sachs joined the firm which prompted the
name change to Goldman Sachs.
In the early 20th Century, Goldman was a major player in establishing the
Initial Public Offering market. It managed one of the largest IPO's to date,
that of Sears Roebuck in 1906. It also became one of the first companies to
heavily recruit those with MBA degrees from leading Business Schools, a
practice that still continues today.
In 1929, it launched the Goldman Sachs Trading Corp., a closed-end mutual
fund with characteristics similar to that of a Ponzi Scheme. The fund failed
as a result of the Stock Market Crash of 1929, hurting the firm's reputation
for several years afterward. [8]
In 1930, Sidney Weinberg assumed the role of Senior Partner and shifted
Goldman's focus away from Trading and towards Investment Banking. It was
Weinberg's actions that helped to restore some of Goldman's tarnished
reputation. On the back of Weinberg, Goldman was lead advisor on the Ford
Motor Company's IPO in 1956, which at the time was a major coup on Wall
Street. Under Weinberg's reign the Firm also started an Investment Research
division and a Municipal Bond department. It also was at this time that the
firm became an early innovator in Risk Arbitrage.
Gus Levy joined the firm in the 1950's as a well known securities trader,
which started a trend at Goldman where there would be two powers generally
vie for supremacy, one from investment banking and one from securities
trading. For most of the 1950's and 1960's, this would be Weinberg and Levy.
Levy was a pioneer in block trading and the firm established this trend
under his guidance. Due to Weinberg's heavy influence at the firm, it formed
an Investment Banking Division in 1956 in an attempt to spread around
influence and not focus it all on Weinberg.
In 1969, Levy took over as Senior Partner from Weinberg, and built Goldman's
trading franchise once again. It is Levy who is credited with Goldman's
famous philosophy of being "long term greedy," which implies that as long as
money is made over the long term, trading losses in the short term are not
to be worried about. That same year, Weinberg retired from the firm.
Another financial crisis for the firm occurred in 1970, when the Penn
Central Railroad Company went bankrupt with over $80 million in commercial
paper outstanding, most of it issued by Goldman Sachs. The bankruptcy was
large, and the resulting lawsuits threatened the partnership capital and
life of the firm. It was this bankruptcy that resulted in credit ratings
being created for every issuer of commercial paper today by several credit
rating services.[9]
During the 1970s, the firm also expanded in several ways. Under the
direction of Senior Partner Stanley R. Miller, it opened its first
international office in London in 1970, and created a Private Wealth
division along with a Fixed Income division in 1972. It also pioneered the
"White Knight" strategy in 1974 during its attempts to defend Electric
Storage Battery against a hostile takeover bid from International Nickel and
Goldman's rival Morgan Stanley.[10] This action would boost the firm's
reputation as an investment adviser because it pledged to no longer
participate in hostile takeovers.
John Weinberg (the son of Sidney Weinberg), and John C. Whitehead assumed
roles of Co-Senior Partners in 1976, once again emphasizing the
co-leadership at the firm. One of their most famous initiatives was the
establishment of the 14 Business Principles[11] that are still used to this
day.
In the 1980s, the firm made a major move by acquiring J. Aron & Company, a
commodities trading firm which merged with the Fixed Income division to
become known as Fixed Income, Currencies, and Commodities. J. Aron was a
major player in the coffee and gold markets, and the current CEO of Goldman,
Lloyd Blankfein, joined the firm as a result of this merger. In 1985 it
underwrote the public offering of the Real Estate Investment Trust that
owned Rockefeller Center, then the largest REIT offering in history. In
accordance with the beginning of the collapse of the Soviet Union, the firm
also became largely involved in facilitating the global privatization
movement by advising companies that were spinning off from their parent
governments.
In 1986, the firm formed Goldman Sachs Asset Management, which manages the
majority of its mutual funds and hedge funds today. In the same year, the
firm also underwrote the IPO of Microsoft, advised General Electric on its
acquisition of RCA and joined the London and Tokyo stock exchanges. 1986
also was the year when Goldman became the first United States bank to rank
in the top 10 of Mergers and Acquisitions in the United Kingdom. During the
1980s the firm became the first bank to distribute its investment research
electronically and created the first public offering of original issue
deep-discount bond.
Robert Rubin and Stephen Friedman assumed the Co-Senior Partnership in 1990
and pledged to focus on globalization of the firm and strengthening the
Merger & Acquisition and Trading business lines. During their reign, the
firm introduced paperless trading to the New York Stock exchange and
lead-managed the first-ever global debt offering by a U.S. corporation. It
also launched the Goldman Sachs Commodity Index (GSCI) and opened a Beijing
office in 1994. It was this same year that Jon Corzine assumed leadership of
the firm following the departure of Rubin and Friedman. The firm joined
David Rockefeller and partners in a 50-50 join ownership of Rockefeller
Center during 1994, but later sold the shares to Tishman Speyer in 2000. In
1996, Goldman was lead underwriter of the Yahoo! IPO and in 1998 it was
global coordinator of the NTT DoCoMo IPO. In 1999, Henry Paulson took over
as Senior Partner.
One of the largest events in the firm's history was its own IPO in 1999. The
decision to go public was a tough one that the partners debated for decades.
In the end, Goldman decided to offer only a small portion of the company to
the public, with some 48% still held by the partnership pool.[12] 22% of the
company is held by non-partner employees, and 18% is held by retired Goldman
partners and two longtime investors, Sumitomo Bank Ltd. and Hawaii's
Kamehameha Activities Assn. This leaves approximately 12% of the company as
being held by the public. Henry Paulson became Chairman and Chief Executive
Officer of the firm.
More recently, the firm has been busy both in Investment Banking and in
Trading activities. It purchased Spear, Leeds, & Kellogg, one of the largest
specialist firms on the New York Stock Exchange. It also advised on a
landmark debt offering for the Government of China and the first electronic
offering for the World Bank. It merged with JBWere, the Australian
investment bank and expanded its investments in companies to include Burger
King, McJunkin Corporation, and in January 2007, Alliance Atlantis alongside
CanWest Global Communications to own sole broadcast rights to the CSI
franchise. In May 2006, Henry Paulson left the firm to serve as U.S.
Treasury Secretary, and Lloyd Blankfein was promoted to Chairman and Chief
Executive Officer.
[edit] Corporate Citizenship
Goldman Sachs has been one of the most aggressive firms on Wall Street about
taking action on climate change; the company sends its bankers home at night
in hybrid limousines.[13] The firm has an Environmental Policy Framework
that was established in 2005.
There are various mentorship programs. The Goldman Sachs Foundation promotes
innovation and academic performance among young people.
[edit] Criticism and Controversy
In 2005, the firm advised both the New York Stock Exchange and Archipelago,
which owns an electronic trading platform, in merger talks. Controversy
surrounded the deal as John Thain, who heads the New York Stock Exchange,
was a former Goldman Sachs Executive.[14]
In 1986, David Brown was convicted of passing inside information to Ivan
Boesky on a takeover deal.[15] Robert Freeman, who was a senior Partner, the
Head of Risk Arbitrage, and a protegé of Robert Rubin, was also convicted of
insider trading, with his own account and with the firm's.[16]
In 2005, Goldman Sachs received criticism from civic groups and New York
City politicians when they received approximately $1.6 billion in taxpayer
subsidies (mostly through Liberty Bonds) from New York City and state
taxpayers to finance the Firm's new headquarters near the World Financial
Center in lower Manhattan.[17]
[edit] See also
[edit] Competitors
* ABN AMRO
* Bear Stearns
* Banc of America Securities
* BNP Paribas
* Citigroup
* Credit Suisse
* Deutsche Bank
* Dresdner Bank
* JPMorganChase
* Lehman Brothers
* Merrill Lynch
* Morgan Stanley
* Natixis
* Société Générale
* UBS
[edit] Other Notable Alumni
* Joshua Bolten - current White House Chief of Staff
* Erin Burnett - CNBC Host
* Sacha Baron Cohen - Actor[18]
* Jim Cramer - founder of TheStreet.com and Smartmoney.com, best
selling author, and host of Mad Money on CNBC
* Henry H. Fowler - 58th United States Secretary of the Treasury
(1965-1969)
* Edward Lampert- Hedge Fund Manager of ESL Investments. Brought
K-Mart out of Bankruptcy in 2003.
* Ocado - 3 Founders of first UK online supermarket were all former
Fixed Income Traders at Goldman Sachs London
* John L. Thornton - academic
* George Herbert Walker IV - member of the Bush family
* Robert Zoellick - United States Trade Representative (2001-2005),
Deputy Secretary of State (2005-2006)
[edit] References
* Goldman Sachs: The Culture of Success. Lisa Endlich. Little, Brown
and Company. 1999. ISBN 0-316-64373-4
1. ^ Goldman Sachs— Google Maps
<http://maps.google.com/maps?f=q&hl=en&sll=40.704066,-74.006395&sspn=0.18791
4,0.31929&q=goldman+sachs&om=1&ll=40.704581,-74.01125&spn=0.011745,0.019956>
. Retrieved on 2007 January 17.
2. ^ GOLDMAN SACHS REPORTS RECORD EARNINGS PER COMMON SHARE OF $19.69
FOR 2006
<http://www2.goldmansachs.com/our_firm/investor_relations/financial_reports/
docs/earnings/4Q06_ER-FINAL-External.pdf> (PDF) p. 1. The Goldman Sachs
Group, Inc. (2006-12-12). Retrieved on 2007 January 17.
3. ^ Gavin, Robert. "Good deal: Average Goldman Sachs employee makes
$622,000
<http://www.boston.com/business/articles/2006/12/12/good_deal_average_goldma
n_sachs_employee_makes_622000/?p1=MEWell_Pos2> ", The Boston Globe, The New
York Times Company, 2006-12-12. Retrieved on 2007 January 17.
4. ^ Pasha, Shaheen. "Banks' love affair with hedge funds
<http://money.cnn.com/2006/10/05/news/companies/banks_hedgefunds/index.htm?p
ostversion=2006100607> ", CNNMoney.com, 2006-10-06. Retrieved on 2007
January 17.
5. ^ >GS Capital Partners
<http://www2.goldmansachs.com/client_services/merchant_banking/pia/capital/i
ndex.html> . The Goldman Sachs Group, Inc. Retrieved on 2007 February 8.
6. ^ Khan, Jasim Uddin. "Bangladesh on Goldman Sachs 'Next Eleven' list
<http://www.thedailystar.net/2005/12/15/d5121501107.htm> ", The Daily Star,
2005-12-15. Retrieved on 2007 January 17.
7. ^ Spiro, Leah Nathans, Stanley Reed. "INSIDE THE MONEY MACHINE–In a
big-is-all business, Goldman vows to go it alone
<http://www.businessweek.com/1997/51/b3558118.htm> ", BusinessWeek, The
McGraw-Hill Companies Inc., 1997-12-22. Retrieved on 2007 January 17.
8. ^ Fox, Justin. "GOLDMAN: WE RUN WALL STREET
<http://money.cnn.com/magazines/fortune/fortune_archive/2005/05/16/8260146/i
ndex.htm> ", Fortune Magazine, Cable News Network LP, LLLP. A Time Warner
Company, 2005-05-16. Retrieved on 2007 January 17.
9. ^ Hahn, Thomas K.. "Commercial Paper
<http://www.richmondfed.org/publications/economic_research/instruments_of_th
e_money_market/ch09.cfm> ", in Timothy Q. Cook and Robert K. Laroche
editors: Instruments of the Money Market
<http://www.richmondfed.org/publications/economic_research/instruments_of_th
e_money_market/instruments.pdf> (PDF), Seventh Edition, Richmond, Virginia:
Federal Reserve Bank of Richmond. Retrieved on 2007 January 17.
10. ^ Rosenkrantz, Holly, Newton-Small, Jay. "Bush Economic Adviser
Friedman to Resign, Aide Says
<http://quote.bloomberg.com/apps/news?pid=10000103&sid=a5PUdvzX0pXc&refer=ne
ws_index> ", Bloomberg.com, 2004-11-23. Retrieved on 2007 January 17.
11. ^ Business Principles
<http://www2.goldmansachs.com/our_firm/our_culture/business_principles.html>
. The Goldman Sachs Group, Inc. Retrieved on 2007 January 17.
12. ^ Spiro, Leah Nathans. "Goldman Sachs: How Public Is This IPO?
<http://www.businessweek.com/1999/99_20/b3629102.htm> ", BusinessWeek
Online, The McGraw-Hill Companies Inc., 1999-05-17. Retrieved on 2007
January 17.
13. ^ "Goldman Sachs and Wall Street Go Green
<http://www.msnbc.msn.com/id/17437401/site/newsweek/> ", Newsweek, Newsweek,
Inc., 2007-03-12. Retrieved on 2007 March 5.
14. ^ Insana, Ron. "NYSE chief: Hybrid trading system's the way to go
<http://www.usatoday.com/educate/college/careers/Bus_talk/talk8-1-05.htm> ",
USA Today, USA TODAY, a division of Gannett Co. Inc., 2005-08-01. Retrieved
on 2007 January 17.
15. ^ Worthy, Ford S., Brett Duval Fromson and Lorraine Carson. "WALL
STREET'S SPREADING SCANDAL
<http://money.cnn.com/magazines/fortune/fortune_archive/1986/12/22/68462/ind
ex.htm> ", Fortune Magazine, Cable News Network LP, LLLP. A Time Warner
Company, 1986-12-22. Retrieved on 2007 January 17.
16. ^ Thomas, Landon Jr.. "Cold Call
<http://nymag.com/nymetro/news/bizfinance/columns/businessclass/5693/index.h
tml> ", New York Magazine, New York Magazine Holdings LLC, 2002-02-18.
Retrieved on 2007 January 17.
17. ^ Lombino, David. "New York Authorizes $1.6B in Liberty Bonds For
Goldman Sachs's New Headquarters <http://www.nysun.com/article/18673> ", The
New York Sun, 2005-08-16. Retrieved on 2007 March 6.
18. ^ Akbar, Arifa. "Baron Cohen comes out of character to defend Borat
<http://news.independent.co.uk/uk/this_britain/article1990387.ece> ", The
Independent, Independent News and Media Limited, 2006-11-17. Retrieved on
2007 January 25.
[edit] External links
* Goldman Sachs website <http://www.gs.com/>
* Goldman Sachs Statement of business principles
<http://www.gs.com/our_firm/the_culture/business_principles.html>
* Goldman Sachs Execution and Clearing <http://gsec.gs.com>
* Spear, Leeds & Kellogg Specialist LLC <http://www.slk.com>
* REDIPLUS <http://www.redi.com>
[edit] Data
* Yahoo! — The Goldman Sachs Group, Inc. Company Profile
<http://biz.yahoo.com/ic/40/40176.html>
* Annual report
<http://www.gs.com/our_firm/investor_relations/financial_reports/annual_repo
rts.html>
[edit] Litigation
* The prosecution and settlement of the research scandal cases
<http://www.sec.gov/spotlight/globalsettlement.htm>
* SEC Final Judgment
<http://www.sec.gov/litigation/litreleases/judg18113.pdf> in SEC v.
Goldman, Sachs & Co.
* Appendix A
<http://www.sec.gov/litigation/litreleases/finaljudgadda.pdf>
* Appendix B
<http://www.sec.gov/litigation/litreleases/finaljudgaddb.pdf>
* Goldman Sachs Investor Education
<http://www.sec.gov/litigation/litreleases/inved18113.pdf>
* Goldman Sachs Distribution Fund Plan Order
<http://www.sec.gov/litigation/litreleases/distr18113.pdf>
Retrieved from "http://en.wikipedia.org/wiki/Goldman_Sachs"
Categories: Companies listed on the New York Stock Exchange | Investment
banks | Companies established in 1869 | Banks of the United States |
Companies based in New York City | Family businesses | Rockefeller Center
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