The Dating Rules at Goldman

A group of women recently filed a sex-discrimination lawsuit against Goldman Sachs. But as Heidi Moore explains, the company’s dating rules may be a bigger problem than strip clubs and groping in the hallways.

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What is it like to be a woman at Goldman Sachs?

The Goldman culture is hard enough to crack if you’re a man; it is more than a touch harder for women. It’s not easy, but neither is it impossible—at least not yet.

Several former and current female employees at the firm think it will be harder there, however, because of a sex-discrimination suit filed last week by three former Goldman women who alleged that they were hauled to strip clubs, groped in hallways and otherwise subject to inappropriate behavior that, later, impeded their promotions and progress through the firm.

The firm’s dating protocols….require employees to disclose their relationships to their direct manager, who can contact what one alum wryly calls “ the inappropriate-behavior SWAT team.”

Every banker on Wall Street believes he works in a meritocracy, but no one can explain why that meritocracy would be composed overwhelmingly of men of the same race and sexual persuasion. If it’s a coincidence, it’s an incredible one.

The Wall Street Journal recently reported that the ranks of women in finance have thinned by 2.6% while the number of men boomed by 9.6%. There is no shortage of diversity efforts for women, but the often unspoken problem is that where diversity efforts run into the shoals is this one thorny area: sex.

Goldman, like other firms, has codified policies on how the sexes should handle conflicts: in the cases of both dating and sexual harassment, incidents and entanglements have to be reported to the boss.

Almost every Wall Street investment bank has a policy that employees have to disclose relationships with bosses, subordinates, clients or vendors. Human resources departments like to be informed of employee relationships—in case they go sour and result in professional trouble or litigation- but they are rarely kept in the loop. The hothouse airlessness of most investment banking culture, with its 15-hour days and shared travel arrangements, inevitably leads to stretched boundaries.

At one white-shoe law firm recently, a cluster of affairs was discovered by accident, according to a source familiar with the situation. A benefits manager in the human resources department noticed an unusual volume of prescriptions for the same expensive drug coming through the medical claims department. The drug: a popular remedy for sexually transmitted diseases. Tracing the claims back to Patient Zero, the benefits and human resources groups were able to tell who wasn't toeing the line of disclosure.

Goldman isn’t particularly unusual in having a disclosure policy; it’s just unusual because people seem to follow it. This is, it’s fair to say, because the firm plays an outsize role in its employees’ lives, becoming a source of professional relationships, friendships, and often, marriages.

Many current and former Goldman employees talk about the firm, without irony, as it were the New Testament God: paternalistic, largely benevolent, ever patient, ever forgiving, ever indulgent of the capers and errors of mere mortals, ever willing to give second chances and route unhappy employees to different areas of the firm where they may thrive.

It’s a God that requires frequent confessionals, as one senior banker there explains: “There is a culture at Goldman which is very strong and clear, which is: it’s okay to make mistakes, as long as you own up to them right away.” The firm’s dating protocols—by all accounts little-known—don’t ban dating within the firm but instead require employees to disclose their relationships to their direct manager, who can contact what one alum wryly calls “ the inappropriate-behavior SWAT team.”

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By all accounts, this is taken seriously. In the discrimination lawsuit, for instance, the Goldman banker alleged to have groped a 26-year-old associate reported it himself to human resources the next day. (She didn’t report it for two years, which appears to have worked against her).

In another instance, one prominent Goldman alumna recalls being taken to dinner by her boss, who spent much of the dinner explaining to her how, if they weren’t working together, he would like to be dating her. She reported it the next day; later, another female employee made a similar complaint and, a pattern having been established, the banker was fired.

Those who don’t own up right away see the Old Testament side of Goldman. Last year, a managing director kissed an associate in view of others at the firm, according to a person familiar with the situation. Neither of them reported it to human resources—which would have been required- but the gossip mill churned and soon the firm’s managers found it out. It was probably the most expensive kiss of the banker’s life: at the end of the year, Goldman chopped his bonus by 25% for bad judgment, this person said. Both bankers are still working at the firm.

Goldman’s favorite option, however, is just to separate people and ship them off to other divisions. In another case, a married partner had a consensual affair with a younger female banker who had a long-term boyfriend. It was consensual, that is, to all but her boyfriend and his wife, who eventually compared notes and created a ruckus. The partner was finally shipped off to another continent.

There are some instances where Goldman itself has governed itself by those rules. Dorothy Price Hill, a former Goldman Sachs risk manager who is now a managing director at investment bank Mid-Market Securities, recalls that even up until the late 1990s, women at Goldman were judged differently than men. In 1999, Hill, then based in Tokyo, received a performance review in which her somewhat old-fashioned boss called her “aggressive”—a word, it turned out, that subtracted points and compensation dollars for a woman, while the same word would boost a male banker’s value. Hill and others complained, and in 2000, Hill and others complained to Goldman and succeeded in equalizing the reviews.

The process isn’t necessarily always fair, depending as it does on the discretion of the individual boss. And there are plenty of unwanted passes anyway, some of which don’t go particularly harshly punished, particularly if the initiator is a powerful partner. And the same factors that create Goldman’s cadre of internal marriages—long hours, a shared employer and career—have also generated some divorces.

On the other hand, there are situations where the relationship between the sexes is not so fraught. By all anecdotal accounts from current and former employees, Goldman has a lot of married couples and encourages them.

Jacki Zehner and her now-husband Greg were both traders when they started dating and became engaged; Zehner waited until after bonus season to tell her bosses that they would be married. They transferred her husband-to-be to a different trading desk and otherwise put no obstacles in the path of the relationship. A year later, in 1996, both of them were named to the firm’s highest honor: a Goldman Sachs partnership. Jacki Zehner was the youngest woman to become a partner of Goldman Sachs.

A prominent former Goldman trader, got married twice to fellow Goldmanites. She dated her first Goldman husband for three years as they sat right across from each other. Later, after they were divorced, she decided to take a break from the firm; when she came back to work for Peter Matthias on consulting for Stephen Friedman and Bob Rubin. Each time, she says, Goldman higher-ups were supportive of the relationships.

The trader, for one, takes a strong anti-complaining stance. “I think there’s a way to make Goldman work for you,” she said, citing Goldman’s financial support for her fund, Milestone Capital Management, and the credibility she gained as an investor because Goldman was on her resume. “The years you spent at Goldman: how do you capitalize on that? There was not any single aspect of it that was perfect, but I chose to see it this way: have I not won the absolute lottery of all time?”

Heidi N. Moore, a financial journalist in New York City, is a former reporter for The Wall Street Journal. Her work has also appeared in the Washington Post, New York, and the Financial Times.