Investment Banks Take A Harder Look At Conflicts Of Interest Hot

Conflicts of interest are the newest focus of Goldman Sachs as well as other investment banks. The brouhaha resulting from Goldman advisor Greg Smith’s very public departure and scathing criticism of the bank has brought sharp attention to the matter. Greater transparency regarding bank holdings will be provided to companies seeking advice on deals.

 

This is a next development in a time of an increased regulatory and consumer protection considerations.  Law firms who work with the banks on deals are also upping their disclosure requirements. Conflicting holdings can easily be accumulated as bankers migrate from firm to firm over the course of a career. Banks previously may not have been aware of holdings which create such a conflict. Keeping track of bankers’ holdings is a challenging task. Some banks are considering a requirement to disclose all holdings regardless of type. Results of conflict discovery could include disclosure to the client or perhaps prevention of a banker’s involvement in a particular deal.