The Subcommittee on Investigations of the Senate held a hearing in which current and former Goldman Sachs employees–including the CEO and CFO–testified. Advisors and industry officials are waxing optimistic that the April 27 Senate hearing in which a number of Goldman Sachs officials were grilled is boosting the chances that a final Senate bill will include a fiduciary duty for brokers, as several Senators on the Subcommittee on Investigations of the Senate Homeland Security Committee pointed to Goldman’s apparent lack of adherence to a fiduciary standard.
“I think the whole hearing was a presentation of how Goldman views the fair dealing/suitability standard,” says Knut Rostad, chairman of the Committee for the Fiduciary Standard. Rostad points to comments made by Senator Susan Collins (R-Maine), which zeroed in on the fiduciary standard, when she asked each of the first four Goldman witnesses–Daniel Sparks, Josh Birnbaum, Michael Swenson, and Fabrice Tourre–whether they had a “duty to act in the best interest of your clients.” Sparks, Swenson, and Tourre replied their duty was to “serve our clients.” Birnbaum, alone, Rostad points out, said: “I believe that we did.”
After hearing from all six of the panelists from Goldman, Rostad notes that Senator Carl Levin (D-Michigan), chairman of the Senate Government Affairs Subcommittee on Investigations, concluded that although Goldman claims to always put clients’ interest first, “You don’t; you (often) put your own interest first.”