Goldman Sachs sacks four executives for serious violations of communications compliance policy

Goldman Sachs has terminated four executives, including its head of transaction banking, for “serious violations” of the firm’s communications policies and failure to cooperate with compliance teams.

15 September 2023 4 mins read
By Jay Hampshire

In brief:

  • Four Goldman Sachs executives have been terminated for “serious violations” of the firm’s communications compliance policies
  • This includes Hari Moorthy, a partner at Goldman and Global Head of Transaction Banking
  • The employees are reported to have also failed to cooperate with the compliance department

Goldman Sachs has fired several employees at its recently established transaction banking division for “serious violations” of its communications policies, according to reports

Four fired including Hari Moorthy, Global Head of TxB

In a memo released internally on Wednesday 14th September, 2023, Goldman told staff that it had:

“Terminated the employment of several leaders in the transaction banking (TxB) business after losing confidence in them following serious violations of firm policies”.

Four employees have been terminated, including Hari Moorthy, a partner at Goldman and Global Head of Transaction Banking. Moorthy had previously discussed how he used meditation as part of his leadership style as “to be able to listen to others … you have to be able to listen to yourself”, although the irony is that his ‘listening to others’ has taken place over non-controlled channels. The division will now be led by Philip Berlinski, Akila Raman, and Luc Teboul.

The individuals are reported to have violated the firm’s communications compliance policy, which requires employees to communicate about firm-related business matters via approved communications channels. While violation of the communications policy is a serious enough matter, it has also been reported that the executives subsequently failed to cooperate with Goldman’s compliance department – doubling down on their non-compliance.

A little bit of history repeating

“Those who cannot remember the past are condemned to repeat it”, according to George Santayana. For many, Goldman Sachs being in hot water for illicit communications will feel like a very recent memory; less than a year ago they were one of 16 Wall Street banks charged by the Securities and Exchange Commission (SEC) as part of a $1.1 billion action for off-channel communications and recordkeeping failures. The firm also made headlines earlier this month after it was fined $5.5 million by the Commodity Futures Trading Commission (CFTC) in a separate case around lapses in record retention.

Goldman has handled this issue in-house, before regulators stepped in, stating that:

“We are not going to comment on individual disciplinary matters. We take our communications policy seriously, and we expect all of our personnel to comply with it.”

These terminations are clear evidence of the firms’ commitment to its communications policy (which is unsurprising given the eye-watering sums paid out in its last entanglement with regulators for illicit comms). Goldman has confirmed that it “remains fully committed to [its] transaction banking business”, which was established in 2020 to help diversify away from its traditional trading and investment banking businesses.

When it comes to effective communications policy, proactivity and pragmatism are key. While organizations might seek to implement channel bans of IM or social media platforms as a ‘sticking plaster’ measure, the tempo of regulatory enforcement actions proves that teams will use the channels they (and their clients) prefer, often in defiance of bans. With new messaging and social channels emerging and being adopted at pace, implementing strong, adaptable policies before channels can pose risk is a vital part of effective communications compliance strategy.

Get the message

The final line in Goldman’s statement – “we expect all our personnel to comply” – carries extra emphasis given the seniority of one of the executives terminated. The rules around communication compliance apply to everyone equally, regardless of rank, and senior staff need to be seen leading by example on compliance policy.

Amid an increasingly ‘zero-tolerance’ atmosphere from regulators on both sides of the pond, an ongoing shift towards individual accountability, and an ever-growing number of communications channels, illicit-comms is a keen challenge for compliance teams. While this instance of Goldman Sachs ‘cleaning house’, and other examples like Morgan Stanley’s system of internal fines, are positive signs of proactivity, time will tell if firms are truly getting the message on communications compliance. And for individuals failing to follow the rules, it might cost you more than a few bucks.

Regulatory scrutiny around off-channel communications is increasing, and with more channels emerging and individuals being held personally liable for breaches, compliance is becoming ever more challenging. Our app enables business communication across every channel, and gives your compliance teams and staff peace of mind by unlocking compliance – without compromise.