JPMorgan CEO warns staff on schadenfreude after Goldman resignation

Thu Mar 15, 2012 10:16am EDT

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

(Reuters) - J.P. Morgan CEO Jamie Dimon warned employees not to seek advantage from competitors' "alleged issues" after a former Goldman Sachs banker sparked a firestorm by charging that Goldman managing directors viewed clients as "muppets".

Dimon's memo, awaiting Asia employees in their e-mail inboxes on Thursday morning and a copy of which was seen by Reuters, also implored staff to focus on their own bank's standards amid the furor stirred after ex-Goldman banker Greg Smith published a scorn-filled resignation letter.

"Today's New York Times op-ed by a Goldman Sachs executive is generating a lot of discussion around the street," Dimon said.

"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."

The Dimon message was sent to the bank's global operating committee and later forwarded to wider parts of J.P. Morgan, sources who have seen the memo said.

J.P. Morgan declined to comment on the memo.

Goldman faced an unprecedented assault from one of its own on Wednesday when the London-based Smith published his resignation letter in the opinion section of the New York Times, calling the Wall Street bank a "toxic and destructive" place.

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

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


Sources at banks including Citi, Credit Suisse and Nomura said they were not aware of any memo similar to Dimon's circulating at their respective firms.

The kerfuffle that followed Smith's letter, however, has sparked worries at rival institutions over disgruntled bankers in their ranks and, according to a banker at a leading U.S. bank, consideration of improvements to internal systems that can address grievances before malcontents go public.

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 trader inside Goldman Sachs 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 view on that," 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 the IPO, 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."

One former banker, who worked in derivatives sales at the time of his post-IPO departure from the firm, said however that Smith's singling out of senior management struck him as unfair.

"When Goldman Sachs was preparing for the IPO we all knew the culture would change, so to single out Lloyd (Blankfein) and Gary (Cohn) and say they wrecked the firm is a bit ridiculous," said the banker.

Two Goldman Sachs clients who work at different hedge funds both said the criticisms that Smith levels at the U.S. investment bank's corporate culture could equally apply to its rivals.

"I don't think that the article is a shock at all. It's probably true at most places, not just Goldman. If you work in a bank, if you don't produce you are gone. That's the culture pretty much everywhere," said one of the hedge fund managers.

Added the other: "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."

(Reporting by Nishant Kumar, Clement Tan and Lawrence White in HONG KONG, Emi Emoto in TOKYO, Narayanan Somasundaram in SYDNEY and Sumeet Chatterjee in MUMBAI; Writing by Michael Flaherty; Editing by Edmund Klamann)

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Comments (3)
TrueNorthHC wrote:
Excuse me but surely no one is surprised by the comments of this ex Goldmans employee are they?

If you are, where have you been for the last few years? If anyone does still really believe that banks are trustworthy institutions that operate to higher moral standards somehow set apart from the rest by a sense of duty and standing, protecting the interests of all of us through their fugal, measured actions, they are ignoring the basic truths which have been staring us in the face for years now.

Many (many) years ago, banks made money by creating a margin between the rate of interest they would offer savers and the costs they would charge to borrowers whom they decided to lend the savers money to. Of course there was money to be made by the employees of the bank but rewards were very comparable to those of other professions and progression took years to achieve and was based on experience, merit and the ability to build confidence amongst the client base.

Last year I did some research into reward in the banking sector and discovered that just over 30 years ago, the remuneration of the entire Board of Directors of one of the UK’s largest institutions totalled around £750,000; already a not insignificant sum in 1980. The same figure for 2009 showed an increase of over 30,000%. ‘That’s irrelevant’ I hear someone shout, ‘it’s all about the profit generated’. And of course, it’s this kind of attitude that got us into such a mess in the first place. By the way, to answer the heckles from the back, that argument carries no weight I’m afraid, your precious profit growth falls well (well, well) short.

Mar 15, 2012 9:40am EDT  --  Report as abuse
CanuckinCT wrote:
The most ridiculous element to the GS tale was when he resume-padded by calling himself a “Rhodes finalist”. Only in America do we celebrate rejection and invent a category. It isn’t the olympics. Kris Kristofferson, Terrence Malick, Wesley Clark, Bill Bradley, Michael Kinsley, Richard Haass, Dick Lugar, Russ Feingold, Bill Clinton, Eric Lander and many more, all US Rhodes Scholars.

Mar 15, 2012 10:54am EDT  --  Report as abuse
cashola wrote:
I think if the clients are making money, they aren’t going to care if you call them late for dinner.

Mar 15, 2012 12:49pm EDT  --  Report as abuse
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