Virtue puffery

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In John Kay’s recent book The Corporation in the Twenty First Century, Kay brings up the case of Goldman Sachs Group, Inc v Arkansas Teacher Retirement System (2021) in which the poor midwestern pension fund, having had its face ripped off by Goldman CDOs during the global financial crisis, claimed to have been misled into doing business with the vampire squid by Goldman’s haughty public declarations of its own business principles, numbering among them “our clients’ interests always come first” and “we have extensive procedures and controls designed to identify and address conflicts of interest”.

Now we should not deny that Goldman takes its business principles very seriously. John C Whitehead formulated these over 40 years ago, and they are drummed into every little squidlet as part of her induction.“Our clients’ interests always come first” is the very first sentence of the very first principle.

And we can chortle at the gullibility of a flyover state pension plan believing anything that an investment banker tells it, but it was still bracing to see Goldman’s defensive strategy in the action, which was to admit the principles are mere puffery.