Goldman Clients Wonder About Their Rank
Senior Editor, CNBC.com
Goldman Sachs chief Lloyd Blankfein admitted that not all Goldman Sachs clients are created equal in the eyes of the firm.
The firm ranks clients in terms of their importance.
"We rank clients," Blankfein testified during the trial of accused insider trader Raj Rajaratnam.
For some hedge fund managers who count themselves as clients of Goldman Sachs , this raises troubling questions.
“Number one on the list: where does Goldman rank my firm?” one hedge fund founder said.
Hedge fund managers are also asking what benefits higher ranked clients might be over lower ranked clients.
“If it’s just a call from Lloyd or a visit with Gary, that’s one thing. If it’s informational—something that would give you a real edge—that something else,” the hedge fund founder said.
Blankfein’s statement will rankle some customers. A year ago, many clients were startled by the news that Goldman had been holding exclusive “trading huddles” with its top hedge fund clients.
Goldman’s work with hedge fund manager John Paulson on the now notorious Abacus deal also raised concerns that Goldman was willing to damage some clients to benefit others.
Of course, almost every Wall Street firm ranks its clients. But rarely is it so openly admitted. Perhaps clients should be happy that Goldman has finally admitted that it plays favorites.
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