Goldman coverage hurting company because of bad PR strategy
New York-based PR executive Eric Starkman writes Monday for Forbes.com that the negative coverage Goldman Sachs has received since being charged with fraud by the Securities and Exchange Commission is a result of its poor public relations strategy.
Starkman writes, “When the Securities and Exchange Commission first unveiled allegations that Goldman had misled investors when it sold a package of risky subprime mortgage-related securities, known as Abacus, the mighty investment bank wasted no time in thundering that the civil allegations were ‘completely unfounded’ and vowing it would vigorously challenge them. A few hours later Goldman issued a second statement, saying that it had lost more than $90 million on the transaction and proffered that it couldn’t have honestly believed the investments would fail, given the firm’s own exposure.
“Quite a few reporters initially parroted Goldman’s argument without objectively analyzing it. However, all Goldman’s strategy bought the firm was time–not a free pass–as the media wasn’t duped for long. Within days, The New York Times reported that Goldman had insurance in place on the Abacus transaction to offset the $100 million loss and, separately, internal Goldman Sachs e-mails made public by a congressional committee also suggested that Goldman had profited handsomely as the housing crisis escalated. The Columbia Journalism Review went so far as to warn reporters to be wary of Goldman’s ‘forked tongue.’
“In addition to combating charges of fraud, Goldman must now deal with the fallout from being publicly accused of lying. Regretfully, there are now other known incidents of spin that suggest that Goldman views the intellect of Congress and the public as cynically as it did the investors who were long the Abacus deal.”
Read more here.