NEW YORK: Major Wall Street firms are getting their internal communications houses in order in the wake of the ongoing analyst scandal that has beset Merrill Lynch, and threatens to ensnare a host of other firms.In an internal Goldman Sachs e-mail memo sent to employees firm-wide and obtained by PRWeek, the bank implores its staff to maintain any documents that may be of interest to authorities conducting an investigation of the firm's research and investment-banking units.
The fact the Goldman memo was sent to every employee - including those with little or no dealings with investment banking or research - seems to indicate the seriousness with which the firm's communications and legal officials are taking the investigation.
PRWeek also secured confirmation that a similar notification was sent to some departments at competitor Credit Suisse First Boston. Spokespersons at both Goldman and Credit Suisse would not comment on the specifics of the memo.
It is clear that the firms are aware of the importance of good internal communications in shaping their external reputations. PRWeek has also learned of a compliance refresher course recently held at Goldman in the midst of the Enron fiasco. Executives explained that the firm's reputation was its number-one asset, and also the easiest to damage and hardest to restore. They also detailed right and wrong practices in dealing with those outside the company.
The ongoing investigations into analyst practices has placed Wall Street firms in an unusual position as they scramble to maintain internal communications at the same time such internal correspondence has severely damaged the reputation of peer-firm Merrill Lynch.
The Goldman memo was sent on May 1, the day The Wall Street Journal reported that the SEC was seeking documents related to analyst research from 10 major firms.
The New York Times has reported that some firms, including Salomon Smith Barney, have already alerted investigators that they are not in compliance with this regulation.
Morgan Stanley CEO Philip Purcell recently acknowledged that investigators might find damaging material among internal e-mails that Morgan may be forced to hand over to investigators.
"I would hope not, and I would expect not,
said Purcell at a May 13 investor conference, "but when you get into a million e-mails, it becomes a challenge."