Goldman Sachs Rumors: Sifting for Truths About Investment Bank's Future

Goldman Sachs Rumors
Goldman Sachs Rumors

Four different pieces of information reported over the past two days, each with a different level of confirmation, show the extent to which the future of Goldman Sachs Group (GS) may be determined be the mainstream press and the extent to which "news" about it is often not confirmed by the investment bank, its clients, or federal regulators.

According to The Wall Street Journal, Goldman Sachs is in settlement talks with the SEC. The paper reported Friday that "The two sides remain far apart. The preliminary settlement talks, held Tuesday, between Goldman co-general counsel Gregory Palm and other lawyers representing the New York company and SEC officials didn't include any specific settlement terms, such as the amount of a fine or agreements Goldman could make with the agency." The source of the story was "people familiar with the situation."

On Thursday, The New York Times reported that American International Group has dropped Goldman as its primary adviser on the restructuring of the big insurance firm. The AIG (AIG) story was based on "three people with knowledge of the matter." The paper wrote that "The move is the first in what some analysts warn could be a series of defections among Goldman's clients after accusations -- vigorously denied by Goldman -- that it defrauded customers in a complex mortgage investment."

In the meantime, it's true that The California Public Employees Retirement System, a huge pension fund that holds close to $258 million in Goldman stock, voted to separate the roles of chairman and CEO at the investment bank. The fund reported at its website that "CalPERS believes if the Chair is not the CEO the board may be able to exercise stronger oversight of management."

Finally, the Financial Times talked to the head of GE (GE) and reported that "Jeffrey Immelt on Thursday criticized the populist backlash against Goldman Sachs and the rest of the banking sector, becoming the second leading businessman to throw his weight behind Wall Street in the past week." The first was Warren Buffett of Berkshire Hathaway (BRK.B)

Goldman's image and its public message are surely undermined by these reports, which may be derived from leaks by interested parties on both sides of the fight for the bank's future. The process is unavoidable when the press is trying to get its hands around such a huge and complex story. It may, however, lead to baseless claims of questionable provenance. Maybe.