The Wall Street Journal reports Monday that the investment firm Goldman Sachs Group Inc. provides select clients with advice that contradicts what its traders tell the rest of its customers.
Once a week for the past two years, Goldman analysts gather in what's called a "trading huddle" to talk about short-term changes in individual stocks or the market at large. The paper leads with an example where analysts gave one stock a "neutral" rating spread to its entire clientele last year while traders called about 50 top customers to say the stock was likely to go up.
Giving a select group of clients preferential treatment made at least one former Goldman investor felt like he was left out in the cold.
"When I joined Goldman as a client, I got all these fancy brochures saying they put the client first," one former Goldman client told the newspaper. "I just don't want to have to worry about them or big clients trading on stuff like this. I was at the end of the food chain."
That client withdrew most of the $20 million he had in Goldman earlier this year, telling the newspaper it was because he had lost money on some Goldman funds.
A Goldman representative told the newspaper that client and others like him had a long-term investment strategy. The firm didn't want to burden all of its investors with advice from the huddles that had nothing to do with many clients' portfolios.
"We are not in the business of serving thousands of retail customers," a Goldman spokesman told the newspaper.
But not all firms are the same. Morgan Stanley's research department sends clients blast e-mails with such short-term advice on individual stocks. The firm also posts that information on its Web site.