Goldman Sachs

Net Worth

$1,000,000,000

Started in (City)

New York

Started in (Country)

United States

Incorporation Date

01st December, 1869

Bankruptcy Date

Founders

Marcus Goldman
Samuel Sachs

About

The Goldman Sachs Group, Inc., is one of the largest investment banking enterprises in the world and is a primary dealer in the United States Treasury security market and a prominent market maker. It is an American multinational investment bank and financial services company headquartered in New York City. It offers services in investment management, asset management, securities, prime brokerage, and securities underwriting. This group also owns Goldman Sachs Bank USA. Goldman Sachs was founded by Marcus Goldman in New York City. He left his native Bavaria in 1848 to start a small shop in the United States. He launched a commercial paper trading business in New York in 1869, geared toward providing other small businesses with short-term capital to cover their growing pains and initial expenses. Samuel Sachs, his son-in-law, joined the firm in 1882. The GS joined NY Stock Exchange in 1896. The company increased its capital to 1.6 million dollars and grew rapidly in just two years. It issued the first IPO in 1906 when it took Sears, Roebuck, and Company public. Goldman also helped F.W. Woolworth and Continental Can, go public through an IPO.

Beginning

Goldman Sachs was founded in New York City in 1869 by Marcus Goldman. In 1882, Goldman's son-in-law Samuel Sachs joined the firm. In 1885, Goldman took his son Henry and his son-in-law Ludwig Dreyfuss into the business and the firm adopted its present name, Goldman Sachs & Co. The company pioneered the use of commercial paper for entrepreneurs and joined the New York Stock Exchange (NYSE) in 1896. By 1898, the firm's capital stood at $1.6 million. Goldman entered the initial public offering market in 1906 when it took Sears, Roebuck, and Company public. The deal was facilitated by Henry Goldman's personal friendship with Julius Rosenwald, an owner of Sears. Other IPOs followed, including F. W. Woolworth and Continental Can. In 1912, Henry S. Bowers became the first non-member of the founding family to become a partner of the company and share in its profits. In 1917, under growing pressure from the other partners in the firm due to his pro-German stance, Henry Goldman resigned. The Sachs family gained full control of the firm until Waddill Catchings joined the company in 1918. By 1928, Catchings was the Goldman partner with the single largest stake in the firm. On December 4, 1928, the firm launched the Goldman Sachs Trading Corp, a closed-end fund. The fund failed during the Stock Market Crash of 1929, amid accusations that Goldman had engaged in share price manipulation and insider trading.

Road to Success

The newly christened Goldman, Sachs & Co. began to explore business options outside of the commercial paper industry, delving into offshore debt and currency arbitrage. It also struck out against established market players by taking on the accounts that larger banks tended to ignore. At the same time, the company began to make a name for itself as an investment bank, calling for stricter company financial reporting to make transactions more transparent and admonishing its client companies to buy back their own shares when they were undervalued. The GS joined NY Stock Exchange in 1896. The company increased its capital to 1.6 million dollars and grew rapidly in just two years. It issued the first IPO in 1906 when it took Sears, Roebuck, and Company public. Goldman also helped F.W. Woolworth and Continental Can, go public through an IPO. The business continued to grow throughout the first portion of the 20th century, ultimately creating the Goldman Sachs Trading Corporation to handle the new influx of business in the 1920s. The end of the decade brought with it the 1929 Great Depression. The newly created trading arm was only propped up by the established commercial paper and investment banking services. Goldman-Sachs began to establish close contacts within the U.S. government, which would pay dividends when the company was called upon to provide financing services during both World War II and the Korean conflict.

Challenges

Fairly early on, the company was not operationally run by the founding families, instead, they had professional managers to lead the company. Goldman Sachs has typically had two people in similar leading positions at the same time. It has most often been a leader pair, not just one leader. For many, this may sound strange, but in Goldman Sachs’ case, it has worked out well. The culture of hard and smart working individuals- It begins in the recruitment process, long before a formal offer is extended. Brains are not enough. The first couple of interviews determine whether a candidate meets the firm’s intellectual standards; the remainder, where far more candidates stumble, are used to determine "fit". Fitting into the firm’s culture is essential at Goldman Sachs, and rugged individualism has no place. Goldman Sachs hires the very most talented young people from the best universities, but to be brilliant and wise is not enough, the more important is that you fit into the house’s culture. There is a great competition to get in, but when you get in, the real competition only starts, if - and as almost everyone is - you are aiming to become a partner someday. It’s not just office hours you are entitled to work at Goldman Sachs, it’s more like 24/7. You must be able to give away many other things in your life if you are willing to succeed at Goldman's. It’s more like a lifestyle and a whole life career than just any other job.

Failures

Goldman-Sachs ran into its first major public controversy during the Great Depression. The company was allegedly involved in a pyramid scheme that involved the creation of over-leveraged investment trusts. Walter Sachs was forced to sell his personal yacht to help keep the company afloat. Since then, the bank has generated a lot of legal issues and controversies all around the world. The 2008-9 controversy- GS misled its investors and profited from the collapse of the mortgage market. Goldman paid a $550 million settlement. Goldman Sachs was "excoriated by the press and the public" despite the non-retail nature of its business that would normally have kept it out of the public eye. Visibility and antagonism came from the $12.9 billion Goldman received—more than any other firm—from AIG counterparty payments provided by the bailout of AIG, the $10 billion in TARP money it received from the government (though the firm paid this back to the government), and a record $11.4 billion set aside for employee bonuses in the first half of 2009. While all the investment banks were scolded by congressional investigations, Goldman Sachs was subject to "a solo hearing in front of the Senate Permanent Subcommittee on Investigations" and a quite critical report. Goldman has also been accused of an assortment of other misdeeds, including a general decline in ethical standards, working with dictatorial regimes, cozy relationships with the US federal government via a revolving door of former employees, insider trading by some of its traders and driving up prices of commodities through futures speculation. Stock price manipulation- Goldman Sachs was charged for repeatedly issuing research reports with extremely inflated financial projections for Exodus Communications and Goldman Sachs was accused of giving Exodus its highest stock rating even though Goldman knew Exodus did not deserve such a rating. On July 15, 2003, Goldman Sachs, Lehman Brothers and Morgan Stanley were sued for artificially inflating the stock price of RSL Communications by issuing untrue or materially misleading statements in research analyst reports, and paid $3,380,000 for settlement.

Achievements

Women Tech Council 2021 Shatter List (March 2021)
Celent Model Risk Manager Awards (March 2021)
Barron’s 100 Most Influential Women US Finance (March 2021)
International Finance Review Awards (February 2021)

CEOs

David Michael Solomon