Goldman Sachs Group Inc. is dismissing about 20 analysts globally in offices including London and New York after discovering they had breached rules on internal training tests, said people familiar with the matter.
The employees, who had been working in the investment bank’s securities division, have either already been dismissed or are in the process of leaving the bank, said the people, who asked not to be identified as the matter is private. The junior-banker title doesn’t refer to research analysts who recommend stocks to investors. JPMorgan Chase & Co., the biggest U.S. bank, fired 10 employees for similar offenses last month, a person briefed on the matter said Friday.
“This conduct was not just a clear violation of the rules, but completely inconsistent with the values we foster at the firm,” said Sebastian Howell, a Goldman Sachs spokesman in London, who said he couldn’t comment further.
Bankers throughout Wall Street often assist each other on basic training and compliance tests because these are seen as time consuming and repetitive, according to separate people with knowledge of the process. Investment banks have started taking strict measures to prevent this from happening in recent years amid increasing scrutiny from regulators.
“In the current environment, any breach that even suggests something inappropriate is going to be dealt with extremely seriously,” said Simon Hayes, a partner at U.K. executive search firm Odgers Berndtson. “It’s no good talking about cultural change if you’re not going to follow through with action when inappropriate cultural behavior is demonstrated.”
In the U.K., for example, employment lawyers have said that regulations intended to improve internal oversight at banks may trigger a new wave of unfair-dismissal claims as managers attempting to protect themselves preemptively dismiss staff who could put the company at risk. Suspicious conduct that may have once warranted a reprimand may now result in termination because senior staff are less likely to take time to manage junior bankers’ performance.
Companies need to be careful in picking and training employees, said Jay Lorsch, a professor at Harvard Business School who as a consultant to Goldman Sachs in the 1980s helped develop an education program for the firm’s partners.
“It would suggest that maybe the kind of care and development that the young people are getting isn’t as strong as it was,” Lorsch said. “You can blame the young people, the ones who cheated, or you could blame the people who were training the young people.”
Goldman Sachs is among the most selective employers on Wall Street. Last year, the bank hired just 3 percent of 267,000 applicants, and Chief Executive Officer Lloyd C. Blankfein has called his firm “the employer of choice in our industry.” Fortune magazine named Goldman Sachs one of the 100 best companies to work for, a citation it has received every year since the list began in 1984, according to a presentation given by Blankfein in February.
“I would imagine these tests are focused on quality of their knowledge of what they’re doing on a day-to-day basis,” said David Archer, a director at Circle Square Talent in London, which places junior employees at large investment banks. “It’s traditionally such a long-hour culture, and there’s so much pressure on juniors that I would imagine they don’t see these tests as make-or-break. They may have had a naive attitude and possibly tried to cut corners.”