The New York Times reports that Goldman Sachs has ruled that its bankers and executives will generally stop serving as directors of other public companies. The move is designed to ensure that the firm is not left open to any potential conflict-of-interest claims.
Although senior executives at most of Goldman's rivals do sit on the boards of other companies, Goldman boss Henry Paulson does not. A firm spokesman said last week that Goldman had always had a strict policy of executives not serving on public company boards and that, going forward, there would have to be 'compelling business reasons' and the firm would have to be 'certain there were no conflicts'. Goldman will, however, make an exception for companies the firm invested in before they went public and where Goldman maintains a strategic interest.
As America gets to grips with better corporate governance procedures, fewer bankers will serve on the boards of public companies as they will not wish to leave themselves open to accusations that they are pushing business their firm's way.