Less than one week after suffering an embarrassing trading glitch that could cost the firm $100 million, Goldman Sachs has reportedly placed four IT staffers on administrative leave.
News reports do not name the four staffers and Goldman Sachs could not confirm the punitive actions.
[Welcome to the Summer of the Trading Glitch.]
According to press reports, the trading error happened during a technology upgrade that went catastrophically wrong.
The system, called a "trading axis", monitors the Wall Street bank's inventory to determine whether it should be a more aggressive buyer or seller in the market.
But a technical error misinterpreted non-binding indications of interest, or IOIs, as firm bids and offers, leading to some trades that were vastly out of line with where market prices were, Reuters reported previously, citing a source familiar with the matter.
Of course in the event of a major systems failure someone should be held accountable and responsibility must start and end somewhere. In order to trade in a super-fast and global marketplace, CIOs and their teams must be able to deliver on the bare minimum of operation standards. But it’s hard to recall where a major systems snafu resulted in an immediate disciplinary action.
While this may seem like a prudent maneuver, Goldman Sachs’ move begs a few questions, such as:
- Why stop at four IT workers? Why not discipline the board of directors and other executives who have kept Goldman Sachs’ IT budget on a tight leash?
- Can Goldman Sachs fire the person who approved a series of IT layoffs since 2008?
- Are any consultants or third-party vendors vulnerable to dismissal, as well?
- Why was this upgrade performed on a Tuesday and not ever the weekend? Was it even tested?
- In this Summer of Glitches, have we entered an era when financial firms finally realize that their legacy systems are not up to the job?
[Can Golvis Break the Goldman Sachs Hedge Fund Curse?]
Placing a quartet of IT professionals on leave might make the suits at Goldman Sachs feel good for now but problems exist. After all, this is a respected and reviled firm with a reputation to maintain - just check out this on-the-nose satire from The Onion - but this seems like overkill. In fact, suspending four IT worker bees may do little to motivate the IT staff except make them fear for their jobs. It may help them to concentrate in the short run but it may also make them sloppy and too frightened to innovate in the long run. Also, the issue of balance comes into play.
After all, was anyone fired when Goldman Sachs was forced to take a government bailout in 2008?