Goldman Sachs Group Inc. has fired several executives in its transaction banking unit, including the head of the business Hari Moorthy, for violating the firm’s communications policy, according to a memo seen by Reuters on Wednesday.
Policy violation and non-cooperation
The memo, written by Goldman Treasurer Philip Berlinski, stated that the individuals violated the firm’s communications policy, which requires employees to communicate about firm-related business on firm-approved channels. The memo did not name the individuals who were terminated.
The fired executives also failed to cooperate with Goldman Sachs’ compliance department, which conducted an internal review of the matter. The memo reminded employees of their duty to comply with rules and to report any concerns.
“We are not going to comment on individual disciplinary matters. As a general matter, we take our communications policy seriously, and we expect all of our personnel to comply with it,” the bank said in a statement.
Transaction banking unit under scrutiny
The transaction banking unit, which was launched in 2019, offers cash management and payment services to corporate clients. The unit is part of Goldman’s strategy to diversify its revenue sources and tap into the growing demand for digital banking solutions.
At an investor day in February, Chief Executive Officer David Solomon said the young business was already profitable and had the potential to deliver more for the company. The unit had more than 250 clients and over $35 billion in deposits as of June 30.
However, the unit has also faced regulatory scrutiny from the Federal Reserve, which previously focused on the company’s oversight of consumer banking. The dismissals are unrelated to those inquiries, according to a person with direct knowledge of the matter.
Interim management and future plans
Berlinski said he will take over day-to-day management of transaction banking alongside Akila Raman and Luc Teboul. Berlinski is also leading Goldman’s financial technology and consumer business on an interim basis.
Moorthy, who joined Goldman in 2017 from Barclays Plc, is no longer listed as a registered broker on industry regulator FINRA’s website. He did not respond to messages seeking comment.
The memo said that Goldman remains fully committed to its transaction banking business and its continued growth. The bank is also looking for a permanent leader for the unit.
Industry-wide crackdown on communication channels
The abrupt ousters highlight the pressure that Wall Street banks face to monitor employees’ communications following a US crackdown on the industry’s widespread use of WhatsApp and other unauthorized platforms. Federal rules require firms to keep records of all work-related messages.
Goldman was one of several banks that regulators fined $200 million apiece last year for failing to keep tabs on employees’ use of off-channel communications. The bank said at the time that it had taken steps to enhance its policies and procedures.
