Goldman To Clients: We May Be Front-Running You
Courtesy of Courtney Comstock and John Carney at Clusterstock/The Business Insider
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It looks like Goldman Sachs was starting to worry about all those stories claiming that the firm trades against clients’ interest, takes positions that are different from what they told clients, and favors some clients with advance word of its market views.
So it sent an email making it perfect clear: Goldman is totally doing those things.
A senior Goldman executive sent an e-mail to clients on Tuesday warning that the firm may have shared investment ideas with the firm’s proprietary trading group or some clients before sharing them with others. It said it may trade ahead of disclosing those idea to clients, and may trade out of positions or change its mind about the ideas without warning.
Andrew Ross Sorkin at the New York Times obtained a copy of the email.
It was basically a big fat caveat emptor to clients. Some highlights:
- "We may trade, and may have existing positions, based on Trading Ideas before we have discussed those Trading Ideas with you."
- "We will also discuss Trading Ideas with other clients, both before and after we have discussed them with you."
- "You should not consider Trading Ideas as objective or independent research or as investment advice."
- "Any opinions that we express when we discuss Trading Ideas with you will be our present opinions only and we will not have any obligation to update you in the event of a change of circumstances or a change of our opinion."
Via Dealbook, here’s the full memo:
Dear client,
We may from time to time discuss with you Trading Ideas generated by our Fundamental Strategies Group. As part of our commitment to managing conflicts of interest appropriately, this message is to explain how the Fundamental Strategies Group interacts with other parts of our organisation and how that impacts on the Trading Ideas.
The Fundamental Strategies Group is a group of cross-capital structure desk analysts employed by our Securities Divisions to assist our traders. They develop Trading Ideas in conjunction with traders. We may trade, and may have existing positions, based on Trading Ideas before we have discussed those Trading Ideas with you. We may continue to act on Trading Ideas, and may trade out of any position, based on Trading Ideas, at any time after we have discussed them with you. We will also discuss Trading Ideas with other clients, both before and after we have discussed them with you.
You should not consider Trading Ideas as objective or independent research or as investment advice. When we discuss Trading Ideas with you, we will not be acting as your advisor (including, without limitation, in relation to investment, accounting, tax or legal matters) and the provision of Trading Ideas to you will not give rise to any fiduciary or equitable duties on our part. We will not be soliciting any action based on Trading Ideas and it is your responsibility to seek appropriate advice.
Any opinions that we express when we discuss Trading Ideas with you will be our present opinions only and we will not have any obligation to update you in the event of a change of circumstances or a change of our opinions. We prepare Trading Ideas based upon information that we believe to be reliable but we make no representation or warranty that such information is accurate, complete or up to date and accept no liability, other than for fraudulent misrepresentation, if it is not.
If you have any concerns about any of these matters, please do not hesitate to contact us.
Kind Regards
Jane Lattin
Assistant to Thomas Mazarakis – Head of Fundamental Strategies
