Goldman Sachs clears itself in "Muppet" caper

Kermit the Frog and Miss Piggy attend the U.K. premiere of "The Muppets" at on Jan. 26, 2012, in London.
Chris Jackson

(Moneywatch) It's been a big week for "The Muppets." First, Big Bird becomes presidential campaign fodder and now comes news that after a thorough investigation Goldman Sachs (GS) has found that none of its employees ever disparagingly referred to customers as "muppets."

In case that doesn't ring a bell, here's a brief recap. Last March, a banker at Goldman named Greg Smith resigned from the financial giant and published an op-ed in The New York Times ripping his former employer. "The interests of the client continue to be sidelined in the way the firm operates and thinks about making money," he wrote, claiming that managing directors at the Wall Street firm referred to clients as "muppets."

Smith also said that the corporate culture at Goldman had changed for the worst during his 12 years at the company. In the past, business at the firm had "revolved around teamwork, integrity, a spirit of humility and always doing right by our clients," he wrote. "The culture was the secret sauce that made this place great and allowed us to earn our clients' trust for 143 years."

Smith wasn't alone in that view of Goldman. In their history of the financial crisis, "All the Devils Are Here," journalists Bethany McClean and Joe Nocera said of the old Goldman culture, "Anything that even appeared to create a conflict with [clients' interests] was not just discouraged, but forbidden." They and others say that ethos started to change in 1999, just before Smith came to work at Goldman, when the company went from being privately held to publicly traded.

Goldman denied Smith's charges. In an apparent effort to control the fallout from the story, the bank also moved to form a panel to investigate his claims in an internal probe that wags quickly dubbed the "muppet hunt."

Those brave hunters reported their findings to Goldman's board on Wednesday: No muppets here. According to The Financial Times:

The investigators interviewed dozens of staff and sifted through millions of emails, finding about 4,000 "muppet" references. But they said 99 percent of those referred to last year's movie of the same name.

However, one email sent to Mr Smith did refer to clients as "muppets." A salesperson wrote: "The muppets don't understand they can trade the futures through a block with other liquidity providers." Goldman executives claim that the language, though disparaging, did not mean the salesperson was attempting to take advantage of clients but to help them understand a trade. It continued: "Can you summarise an email on how it works?"

Not that Goldman's investigators back empty-handed. The report turned up plenty of dirt about Smith. For instance, managers at the firm said he "complained about his bonus and said he deserved to be paid more than $1 million."

Goldman's report seems to boil down to two things: The banks' executives complain about not making enough money, and Goldman is a hotbed of Jim Henson fans.

Big Bird should keep this in mind in case he suddenly needs a new job.

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    Constantine von Hoffman is a freelance writer and writing coach. His work has appeared in outlets such as Harvard Business Review, NPR, Sierra magazine, Brandweek, CIO, The Boston Herald, TheStreet.com, CSO, and Boston Magazine.