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Goldman Analysts Have E-Mail Issues

Nov 26, 2002 | Wall Street Journal

Another batch of potentially embarrassing stock-analyst e-mails could put another big securities firm under scrutiny, Tuesday's Wall Street Journal reported.

Two senior stock analysts at Goldman Sachs Group Inc. exchanged e-mails in late 2000 that indicate both were troubled by the firm's bullish stance on telecommunications stocks, but in some cases didn't lower their ratings on the stocks, in part because of concerns about possibly jeopardizing investment- banking business.

The disclosure of the Goldman e-mails follows revelations earlier this year of the contents of e-mails written by analysts at Merrill Lynch & Co., Citigroup Inc.'s Salomon Smith Barney unit and the Credit Suisse First Boston unit of Credit Suisse Group AG. In those e-mail messages, analysts privately questioned or even disparaged stocks that they publicly promoted and, in some cases, indicated they felt pressured by investment bankers to maintain positive ratings on stocks in order to help win lucrative business.

Investigators are sifting through e-mail messages and other documents from many securities firms as part of a broad inquiry into conflicts of interest on Wall Street.

In the latest development reported in the Sunday Times newspaper in the United Kingdom over the weekend James Golob, who is the London-based co-head of telecommunications research, noted in an e-mail to New York-based co-head Frank Governali Aug. 24, 2000, that telecom stocks still made up the bulk of companies on Goldman's recommended list, even though many of the stocks had been "tanking for three months."

In an e-mail response later that day, Mr. Governali agreed the situation was " ridiculous" and noted that, in some cases, "investment banking considerations have prevented me from making a change." Mr. Governali cited AT&T and WorldCom Inc. as examples of where this had occurred.

Messrs. Golob and Governali were unavailable to comment, but Lucas van Praag, a spokesman for Goldman Sachs in New York, said the e-mails were authentic. However, Mr. van Praag said the messages had been taken out of context and were misleading. "Any e-mail traffic is selective if you don't get the whole chain," he said, although he declined to provide more e-mails that would give the context, saying that would be inappropriate.


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