Updated 04.23.2010

Summary: At present, Goldman Sachs is facing the heat from certain controversial events that have the potential to affect its international reputation and standing. These events have affected its scores with the Board of Directors and Senior Management score falling to 3.48 for 2009 from 3.90 for 2008(Out of 5). Its Internal Control Environment score has also fallen to 3.37 in 2009 from a much higher score in 2008.

Obviously, the big news with Goldman Sachs and one that affects its governance scores, is that it has been charged with civil fraud by the SEC. The complaint alleges that it failed to disclose to its investors that assets that were being sold were designed by a firm that was betting against these assets. Goldman’s Internal Control Environment has been scored accordingly.

There are other issues on its Internal Control Environment that have affected its scores including audit committee directors with multiple public company directorships, directors who appear to be ill qualified for the positions they hold as well as related party transactions between the company and senior management and between the company and directors.

On the Board of Directors and Senior Management front, a big issue is the absence of a key Board level committee that would provide oversight of an area that is critical to any financial company. Another hit for Goldman on its ‘Board of Directors and Management’ category is the fact that Director Rajat Gupta has been notified by federal prosecutors about his alleged connections to the Galleon hedge fund controversy. Director Gupta has not been directly charged in this case. ‘Board Independence’ has also been affected by the fact non management meetings were held less frequently than full Board meetings that included the 2 employee directors.

Detailed Scorecard