Who are the muppets now? Goldman exposé falls short of hype
NEW YORK (Reuters) - The tell-all book that Goldman Sachs Group Inc (GS.N) former equity derivatives salesman Greg Smith has delivered may end up being remembered more for the marketing skills he picked up at the Wall Street bank than for any bombshell revelations.
Smith created a furor earlier this year when he resigned from the blue chip Wall Street firm, alleging in a New York Times Op-Ed column that the firm had engendered a "toxic" culture of treating clients as "muppets" - slang in Britain for idiots - and relieving them of their money.
Smith then promised a book about the bank, building up expectations of an exposé with new insights about the culture at Goldman. The threat prompted a public relations campaign and internal inquiries at the bank, as it tried to avoid another hit to its image after suffering a barrage of bad publicity in recent years.
Smith reportedly received $1.5 million as an upfront payment for the book, which is being published by Grand Central Publishing, a unit of Hachette. He has lined up a series of interviews, including one with Reuters, to talk about the book "Why I left Goldman Sachs", which will be released on Monday.
Early reviews of Smith's 288-page book are now in, and they aren't good. Reviewers, who received copies of the full book, have panned it for being a sleepy read with no big revelations -- or worse, misleading.
The tawdriest revelations are about a bachelor party in Las Vegas with a topless woman, and Smith having seen Lloyd Blankfein, Goldman's chief executive, in the buff after showering at the gym.
"There were no examples of a toxic culture at work, no actual names of morally bankrupt people and no examples of a client getting ripped off," wrote James Stewart, himself the author of top selling business books such as Den of Thieves, in his column in the New York Times.
"Mr. Smith's book might even bolster Goldman's reputation. After all, if Mr. Smith is the ultimate insider, and this is as bad as it gets — Mr. Smith in a hot tub at the Mandalay Bay Hotel in Las Vegas with a topless woman — then he hasn't made much of a case," said Stewart.
Stewart also cast doubt on some of the anecdotes Smith tells in his story, interviewing people who were in his internship class, such as Teddy Schwarzman, son of Blackstone Group LP (BX.N) CEO Stephen Schwarzman. Schwarzman and others say the incidents Smith described, such as an intern running out of a room crying after being humiliated by a more senior Goldman executive, never happened.
Other early reviews have also been critical. The financial blog Dealbreaker mocked less-than-revelatory anecdotes in Smith's book, including one in which a managing director threw out a "cheddar cheese salad" that an intern had brought him for lunch, instead of the cheese sandwich he had asked for. That anecdote led to more jokes on Twitter and other financial blogs about what, exactly, a cheddar cheese salad is.
Smith's publicist, Jimmy Franco, did not respond to a request for comment for this article.
Smith's ability to so easily build up buzz about his book over the past few months shows how difficult it has been for Goldman to try to counter perceptions that it is the poster child for all that's wrong on Wall Street.
In 2010, the U.S. Securities and Exchange Commission accused the bank of betting against clients on a mortgage trade, charges that were later settled, but nevertheless led to a firestorm of criticism. One of its former traders, Fabrice Tourre, is due in court next summer to face civil charges for his involvement in those events.
Smith's allegations had raised the same questions about Goldman's culture and ethics all over again.
For its part, Goldman has characterized Smith as a disgruntled and mediocre employee who stirred up all this attention because he did not get the raise and promotion he wanted. Smith spent 12 years at the investment bank. By the time of his resignation, he was a vice president, earning about $500,000 a year, Goldman said.
Goldman has said that it looked into Smith's assertions and did not find any evidence of employees misbehaving or treating clients poorly. Blankfein told CNBC recently that the firm "went over everything like crazy and, frankly, we could find nothing."
The marketing strategy for the book shines a spotlight on tactics used by publishers and authors to drum up sales for upcoming publications - and the problems that it can create when the book in question fails to deliver.
It appears to be "a typical example of overpromising and under-delivering," said George Belch, chair of the marketing department at San Diego State University and an expert on consumer behavior, who noted that he has not yet read the book.
"What they do is try to drum up publicity and whet the public appetite, and clearly Goldman Sachs, for certain portions of the population, is intriguing. But that doesn't mean the book will do anything more than reinforce your disdain for the industry if you already feel that way."
Smith's failure to meet expectations also raises uncomfortable questions for the Times, which first published his allegations in an op-ed column.
On Friday morning, New York Times business columnist Andrew Ross Sorkin said on CNBC he thought the newspaper might have been "duped" by Smith into publishing the op-ed in the first place, given the lack of substantial information in the book.
A Times spokeswoman declined to comment.
Smith, who vanished from the public spotlight after his Times op-ed appeared in March, will make his first television appearance on Sunday evening, on the CBS show "60 Minutes."
A clip of the show released on Friday has him recounting an incident in which he says a 24- or 25-year-old junior salesman calls a client a "muppet" after charging the client an additional $1 million for a trade.
"Now you could think to yourself, 'Is this some rogue guy who's just talking callously about clients?'" Smith told CBS. "But his boss, who's a managing director, was sitting right next to him nodding and chuckling along."
In the interview, Smith wears a dark blue suit, white shirt and red tie, talking for the first time to the public in his native South African accent.
Smith told CBS he does not think he betrayed Goldman and that he has gone on this public campaign to try to affect change at a firm he was once proud of.
Belch, the marketing professor, said that by publicly slamming the firm, Smith might have done more harm than good, since the book appears to have little new information.
"Here's another book about how we got taken to the cleaners by the financial services industry," said Belch. "Well, yeah, what a shock. Most people don't want to spend money to read about it."