Goldman Sachs Fired Analysts for Cheating on Training Tests

Perhaps, one of the most surprising news last week was about the dismissal of 20 Goldman Sachs analysts, a leading banking organizations, on account of cheating, clearly reveals that how easy it is for the test administrators to monitor and track the offenders. This is indeed an alarm for potential cheaters, letting them know that they should be aware of the fact that unsophisticated search tricks can easily be traced. Goldman Sachs had warned the analysts before, on a recurrent course, that there is no margin of tolerance for the cheating on the tests. This statement has come from the people familiar with this matter and they also said that the bank had elevated its test policies.

The Wall Street firm revealed that analysts from London, New York and other offices had been found violating the internal rules while taking the exams, which are the tools of evaluation for employees’ understanding of the industry concepts and key policies[1]. This dismissal has occurred in Goldman’s securities business unit. The spoke person of Goldman Sachs in London has labeled this a clear violation of rules and a complete inconsistency with the values they foster at the firm.

Going into the integrity of the matter, I would throw some light on the procedure. When analysts start their career at Goldman, they are required to appear in Goldman Sachs University training and orientation program. Here, they experience trainings across multiple topics and functional areas. They have to attend the tests in order to ensure that they are grasping whatever is being taught. As with a number of Wall Street banks, Goldman invests a huge sum of resources in training its new hiring. During GSU program, analysts attend sessions in which various modules are learned and senior executives address.

Landing as analysts at Goldman is quite difficult. Last year, the firm’s CEO specified that how competitive it is to grab an analyst’s role at Goldman. Over 43,000 applications were received for 1900 analysts’ positions[2]. Since the baking giant accepts only 4 percent of these applications, this makes it harder to enter the Goldman than to enter the Harvard University.

Experts have stated that cheating is relatively easy to identify. From using Google for searching test answers on the firm’s controlled computer systems, it seems that such tech savvy audience didn’t consider much about the chance of getting caught or being investigated. In fact, they were also aware of the statements that clearly indicate incredulity and dismay that they would be held liable for cheating on such a minor test. To my surprise, the “best and biggest” on the Wall Street, have been investigated and later dismissed for the cheating in this case. They have captured the imagination. The premier global investment bank had traced some of the brightest and smartest young minds on Wall Street cheating. If they were aware of being monitored and investigated during this relatively inconsequential test, their behavior might have been changed.

Is Goldman’s act of firing executives for cheating on a relatively inconsequential test giving a “Yates Memo” message[3]?

In issuing Yates Memo, the Department of Justice established on public notice that it would be individuals who are going to be punished for well-planned deceptions and corporate misdeeds. This is a notable departure from the preceding administration at the Department of Justice under former Attorney General Eric Holder. Author of an infamous “Holder Memo” that provided the authority for DoJ attorneys to neglect the criminal prosecution if prosecutors were of opinion that such wrongdoing can harm the economy, the moral weapon “Holder” ushered in led to a slippery slope[4].

While there has never been an academic study or evidence that prosecuting individuals Wall Street offenders could harm the economy, the memo was duly considered by both the law violators and those fighting the criminal offence. There has never been a known academic study or even DoJ internal study that reflects past cases where prosecuting them led to economic downfall. This policy and its not proven basis for not prosecuting individuals, seems to be changing. The Yates Memo is stating, at least symbolically, that individuals at firms would be prosecuted for such conducts, which is an important and much needed departure[5]. The parallels with Goldman’s test cheating issue are, obviously, problems on quite different levels; however, they transmit the same message regarding intolerance for unethical behavior.

While this test cheating scandal seems a black eye, the question is that is this leading investment bank really making a statement in firing the cheaters that, as per reports, were tolerated previously? Maybe this is a symbol of bravery, of the bank, the acknowledged leader among other investment banks, making a benchmark statement that what had been tolerated in past is no longer tolerated and acceptable- and a sign of Wall Street clearing itself from within. This is indeed the more positive interpretation of events.

[1] http://www.wsj.com/articles/goldman-firing-about-20-junior-staffers-for-cheating-on-tests-1445010241
[2] http://www.constructionenquirer.com/2015/10/21/site-safety-test-centre-cheats-exposed/
[3] http://www.valuewalk.com/2015/10/goldman-cheating-test/
[4] http://www.businessinsider.com/goldman-sachs-traders-cheat-on-internal-exam-2015-10
[5] http://www.businessinsider.in/Here-is-how-those-Goldman-Sachs-traders-got-busted-for-cheating/articleshow/49423900.cms

Copyright 2015 Bryant Nielson. All Rights Reserved.

Bryant Nielson – Managing Director of CapitalWave Inc.– Being a big believer in Technology Enabled Learning, Bryant seeks to create awareness, motivate adoption and engage organizations and people in the changing business of education. Bryant is a entrepreneur, trainer, and strategic training adviser for many organizations. Bryant’s business career has been based on his results-oriented style of empowering the individual.
Learn more about Bryant at LinkedIn: www.linkedin.com/in/bryantnielson