Fordham Law


Goldman Sachs’s Harfouche Departs From European Equities Post

Annemarie McAvoy in Bloomberg Business Week, November 10, 2010

Media Source

Nov. 10 (Bloomberg) -- Goldman Sachs Group Inc., the top- ranked manager of European stock sales this year, dismissed Alexandre Harfouche, the co-head of European equity syndicate, according to a person familiar with the matter.

Harfouche didn’t follow compliance rules at New York-based Goldman Sachs, according to the person, who declined to be identified because the matter is considered private. The violations involved a failure to make certain disclosures and didn’t break securities laws or harm clients, said the person.

“Mr. Harfouche no longer works for the firm,” New York- based Goldman Sachs said in a statement, without giving a reason. Fiona Laffan, a spokeswoman in London, said she couldn’t comment.

Chief Executive Officer Lloyd Blankfein is trying to repair damage to the firm’s reputation inflicted by the U.S. Securities and Exchange Commission’s April fraud lawsuit, which accused Goldman Sachs of misleading investors on a 2007 mortgage-linked security. That was settled for $550 million in July. The firm has also paid fines to U.K. and U.S. regulators for failing to notify them of the SEC probe.

“They’re going to be very careful to make sure all of their internal policies and controls are being applied,” said Annemarie McAvoy, an adjunct professor at Fordham University School of Law who has worked as an in-house lawyer at Morgan Stanley and Citigroup Inc. “Given what they just went through, they’re not going to take chances.”

Compliance Rules
Financial institutions create compliance rules to help them meet regulatory requirements even when the regulations don’t spell out exactly what the firm has to do, according to McAvoy. For senior employees like Harfouche, monitoring junior staff and notifying superiors about new information or problems can be among the requirements, she said.

“The internal policies and procedures cover just about everything these financial firms do,” she said. “So if a step wasn’t followed in whatever process was going on, or maybe they were skipping a step -- there are all kinds of scenarios.” McAvoy said.

Harfouche, promoted to managing director last year along with his co-head Daniel G. Martin, was responsible for advising corporate clients on large sales of securities known as block trades. Based in London, Harfouche has been listed as inactive on the Financial Services Authority’s Register since the end of last month.

FSA spokesman Chris Hamilton declined to comment on Harfouche’s departure. Harfouche couldn’t be reached through Goldman Sachs and isn’t listed in the London directory.

Goldman Sachs is the top-ranked adviser on share sales in Europe, the Middle East and Africa this year, according to data compiled by Bloomberg. The New York-based firm led Renault SA’s sale of its 3 billion-euro ($4.1 billion) stake in Volvo last month, the data show.

The Financial Times reported on Harfouche’s departure late yesterday.