Goldman Sachs

Founding and establishment

Second Goldman Sachs logo (1999–2020)

Third Goldman Sachs logo (2020–2024)

In 1869, Goldman Sachs was founded by Marcus Goldman in New York City in a one-room basement office next to a coal chute.^[6][7][8] In 1882, Goldman's son-in-law Samuel Sachs joined the firm.^[9][10] In 1885, Goldman's son, Henry Goldman, and his son-in-law, Ludwig Dreyfuss, joined the business and the firm adopted its present name, Goldman Sachs & Co.^[11] The company pioneered the use of commercial paper for entrepreneurs and joined the New York Stock Exchange (NYSE) in 1896.^[12] By 1898, the firm's capital stood at $1.6 million.^[12] It opened offices in Boston and Chicago in 1900, San Francisco in 1918, and Philadelphia and St. Louis in 1920.^[13]

Goldman Sachs entered the initial public offering (IPO) market in 1906 when it took Sears, Roebuck and Company public.^[12] The deal was facilitated by Henry Goldman's personal friendship with Julius Rosenwald, an owner of Sears.^[12] Other underwriting work for IPOs followed, including those of General Cigar Company also in 1906, F. W. Woolworth Company in 1912, and Continental Can.^[13][12] The firm was an innovator at establishing the price–earnings ratio, instead of book value, as a method for valuing companies, and was therefore able to raise funds for retailers and companies with few hard assets.^[13]

In 1912, Henry S. Bowers became the first non-member of the founding family to become a partner of the firm and share in its profits.^[12] In 1917, under growing pressure from the other partners in the firm due to his pro-German stance, Henry Goldman resigned.^[12] The Sachs family gained full control of the firm until Waddill Catchings joined the company in 1918.^[12] By 1928, Catchings was the Goldman Sachs partner with the single largest stake in the firm.^[12] In 1919, the company acquired a major interest in Merck & Co. and in 1922, it acquired a major interest in General Foods.^[13] On December 4, 1928, the firm launched the Goldman Sachs Trading Corp., a closed-end fund.^[14] The fund failed during the Wall Street Crash of 1929, amid accusations that Goldman Sachs had engaged in share price manipulation and insider trading.^[12]

1930–1979

In 1930, during the Great Depression, the firm ousted Catchings, and Sidney Weinberg assumed the role of senior partner. Weinberg shifted the firm's focus away from trading and toward investment banking.^[12] His actions helped to restore some of the firm's tarnished reputation. Under Weinberg's leadership, Goldman Sachs was the lead advisor on the $657 million IPO of Ford Motor Company in 1956, a major victory at the time, as well as the $350 million debenture offering by Sears Roebuck in 1958.^[13] Under Weinberg's leadership, the firm started an investment research division and a municipal bond department, and it became an early innovator in risk arbitrage.^[12]

In the 1950s, Gus Levy joined the firm as a securities trader, where two powers fought for supremacy, one from investment banking and one from securities trading.^[15] Levy was a pioneer in block trading and the firm established this trend under his guidance. Due to Weinberg's heavy influence, the firm formed an investment banking division in 1956 in an attempt to shift focus off Weinberg.^[12] In 1957, the firm's headquarters were relocated to 20 Broad Street, New York City.^[12]

In 1969, Levy took over Weinberg's role as senior partner and built the firm’s trading franchise once again.^[16] Levy is credited with the firm’s famous philosophy of being "long-term greedy," which implied that as long as money is made over the long term, short-term losses are bearable. At the same time, partners reinvested nearly all of their earnings in the firm.^[17] Weinberg remained a senior partner of the firm and died in July of that year.^[18]

Another financial crisis for the firm occurred in 1970, when the Penn Central Transportation Company went bankrupt with over $80 million in commercial paper outstanding, most of it issued through Goldman Sachs. The bankruptcy was large, and the resulting lawsuits, notably by the SEC, threatened the partnership capital, survival, and reputation of the firm.^[19] It was this bankruptcy that resulted in credit ratings for every issuer of commercial paper today by several credit rating services.^[20]

Under the direction of partner Stanley R. Miller, the firm opened its first international office in London in 1970 and created a private wealth management division along with a fixed income division in 1972.^[13][21] It pioneered the "white knight" strategy in 1974 during its attempts to defend Electric Storage Battery against a hostile takeover bid from International Nickel and Morgan Stanley.^[22] John Weinberg, the son of Sidney Weinberg, and John C. Whitehead assumed the roles of co-senior partners in 1976, once again emphasizing the co-leadership at the firm. One of their initiatives was the establishment of 14 business principles.^[23]

1980–1999

In 1981, Goldman acquired Spears, Benzak Salomon & Farrell, an asset manager.^[24] It was sold to KeyCorp in 1995.

In November 1981, the firm acquired J. Aron & Company, a commodities trading firm that merged with the Fixed Income division, which was renamed as Fixed Income, Currencies, and Commodities.^[24][25][26] J. Aron was involved in the coffee and gold markets. The former CEO of Goldman Sachs, Lloyd Blankfein, joined the firm as a result of this merger.^[27]

In 1983, the firm moved into a newly constructed global headquarters at 85 Broad Street and occupied that building until it moved to its current headquarters in 2009.^[28][29] In 1985, it underwrote the public offering of the real estate investment trust that owned Rockefeller Center, then the largest REIT offering in history.^[30] In accordance with the beginning of the dissolution of the Soviet Union, the firm also became involved in facilitating the global privatization movement by advising companies that were spinning off from their parent governments.^[31]

In 1986, the firm formed Goldman Sachs Asset Management which provides investment and advisory services across public and private markets for institutions, financial advisors, and individuals.^[32] In the same year, the firm also underwrote the IPO of Microsoft, advised General Electric on its acquisition of RCA,^[32] and joined the London and Tokyo stock exchanges, where its mergers and acquisitions grew.^[13] During the 1980s, the firm became the first bank to distribute its investment research electronically and created the first public offering of original issue deep-discount bond.^[32] In 1988, it helped the State Bank of India obtain a credit rating and issue US$200 million in the US commercial paper market.^[33]

Robert Rubin and Stephen Friedman became co-senior partners in 1990 and pledged to focus on globalization of the firm to strengthen the merger & acquisition and trading business lines.^[34] In 1990, the firm introduced paperless trading to the New York Stock Exchange.^[35] Rubin left the firm in 1992 to work in the Presidency of Bill Clinton.^[13] In 1994, the company launched the Goldman Sachs Commodity Index (GSCI) and opened its first office in China in Beijing.^[36] That same year, Jon Corzine became CEO, following the retirement of Friedman as senior partner.^[37]

After decades of debate among the partners, Goldman Sachs became a public company via an IPO in May 1999.^[38] Goldman Sachs sold 12.6% of the firm to the public, and after the IPO, 48.3% of the firm was held by 221 former partners, 21.2% of the firm was held by non-partner employees, and the remaining 17.9% was held by retired Goldman Sachs partners and two long-time investors, Sumitomo Bank Ltd. and Assn, the investing arm of Kamehameha Schools.^[39] The shares were priced at $53 each at listing.^[40] After the IPO, Henry Paulson became chairman and chief executive officer, succeeding Jon Corzine.^[41]

In July 1999, the company acquired Hull Group, an electronic trading company, for $531 million.^[42][24]

2000–present

In September 2000, Goldman Sachs acquired Spear, Leeds, & Kellogg, one of the largest specialist firms on the New York Stock Exchange, for $6.3 billion.^[43]

In July 2003, Goldman Sachs acquired Ayco Company, engaged in financial planning and wealth management for top-ranking company executives.^[24][44][45]

In May 2006, Henry Paulson left the firm to serve as United States Secretary of the Treasury, and Lloyd Blankfein was promoted to chairman and chief executive officer.^[46]

In September 2008, Goldman Sachs and Morgan Stanley, the last two major investment banks in the United States, both confirmed that they would become bank holding companies.^[47][48] The Federal Reserve's approval of their bid to become banks ended the business model of an independent securities firm, 75 years after Congress separated them from deposit-taking lenders, and capped weeks of chaos that sent Lehman Brothers into bankruptcy and led to the rushed sale of Merrill Lynch to Bank of America.^[49] Also in September 2008, Berkshire Hathaway agreed to purchase $5 billion in Goldman Sachs preferred stock, and also received warrants to buy another $5 billion in Goldman Sachs common stock within five years.^[50] The company also raised $5 billion via a public offering of shares at $123 per share.^[50] Goldman Sachs also received a $10 billion preferred stock investment from the U.S. Treasury in October 2008, as part of the Troubled Asset Relief Program (TARP).^[51] In June 2009, Goldman Sachs repaid the U.S. Treasury's TARP investment, with 23% interest (in the form of $318 million in preferred dividend payments and $1.418 billion in warrant redemptions).^[52] in March 2011, Goldman Sachs received Federal Reserve approval to buy back Berkshire Hathaway's preferred stock in Goldman Sachs.^[53]

In November 2009, Goldman Sachs opened its new headquarters at 200 West Street.^[54]

In September 2011, Goldman Sachs announced that it was shutting down Global Alpha Fund LP, its largest hedge fund, which had been housed under Goldman Sachs Asset Management (GSAM).^[55][56] Global Alpha, which was created in the mid-1990s with $10 million,^[57] was once "one of the biggest and best performing hedge funds in the world" with more than $12 billion assets under management (AUM) at its peak in 2007.^[58] Global Alpha used quantitative analysis and computer-driven models to invest,^[55] using high-frequency trading. It was founded by Cliff Asness and Mark Carhart, who developed the statistical models on which the trading was based.^[57] Global Alpha was described by The Wall Street Journal as a "big, secretive hedge fund"—the "Cadillac of a fleet of alternative investments" that had made millions for Goldman Sachs by 2006.^[59] By mid-2008, assets under management (AUM) of the fund had declined to $2.5 billion, by June 2011, AUM was less than $1.7 billion, and by September 2011, after suffering losses that year, AUM was approximately $1 billion.^[60]

In the first quarter of 2014, Goldman Sachs acquired Deutsche Asset & Wealth Management's stable value business.^[24][61]

In August 2015, Goldman Sachs agreed to acquire General Electric's GE Capital Bank online deposit platform, including $8 billion of online deposits and another $8 billion of brokered certificates of deposit.^[62]

In April 2016, Goldman Sachs launched GS Bank, a direct bank.^[63] In October 2016, Goldman Sachs Bank USA started offering no-fee unsecured personal loans under the brand Marcus by Goldman Sachs.^[64]

In April 2018, Marcus by Goldman Sachs acquired Clarity Money, a personal finance management mobile app, for $100 million.^{[24][65][66][67]}

In July 2018, Goldman Sachs announced that David M. Solomon would succeed Lloyd Blankfein as chairman and chief executive officer.^[68]

In March 2019, Apple announced that it would partner with Goldman Sachs to launch the Apple Card, the bank's first credit card offering.^[69]

In May 2019, Goldman Sachs acquired United Capital, a boutique wealth manager, for $750 million.^[45][24]

In August 2021, Goldman Sachs announced that it had agreed to acquire NN Investment Partners, which had $335 billion in assets under management, for €1.7 billion from NN Group.^[24][70]

In September 2021, the company agreed to acquired GreenSky, a buy now, pay later service for home improvement loans, for $2.24 billion.^[24][71]

In August 2022, Goldman Sachs acquired NextCapital, a provider of robo-advisor services for retirement accounts.^[24][72][73]

In January 2026, Goldman Sachs announced that it has entered into an agreement to transition the Apple Card program to JPMorgan Chase in 2028.^[74]

In April 2026, Goldman Sachs acquired Innovator Capital, which managed 171 ETFs with about $31 billion in assets, for $2 billion.^[75]

In August 2026, Goldman Sachs acquired NEOS, a provider of exchange-traded funds that use options strategies, for as much as $2.25 billion.^[76]

2003 global analyst research settlement

In 2003, Goldman Sachs resolved regulatory and civil claims regarding conflicts of interest between its equity research and investment banking businesses during the dot-com bubble. This included a $110 million payment as part of the multi-firm global analyst research settlement with the SEC and state regulators, alongside minor multi-bank class-action settlements concerning research coverage of specific entities including Exodus Communications and RSL Communications.^[78]

2008 financial crisis: Conflict of interest in Abacus mortgage-backed CDOs

During the subprime mortgage crisis and the 2008 financial crisis, instead of warning its clients of the risks of investing in subprime debt, the company bet against its own clients, primarily insurance companies and pension funds, and profited, leading to allegations of a conflict of interest.^[79]

Unlike many investors and investment banks, Goldman Sachs anticipated the subprime mortgage crisis.^[80] Some of its traders became "bearish" on the housing boom beginning in 2004 and developed mortgage-related securities, called synthetic CDOs, originally intended to protect Goldman Sachs from investment losses in the housing market. In late 2006, Goldman Sachs management changed the firm's overall stance on the mortgage market from positive to negative. As the subprime mortgage crisis accelerated, Goldman Sachs increased its structuring of these instruments, shifting its macro portfolio to a net-short position that generated significant trading revenue as mortgage defaults rose.^[80]

Through April 2007 Goldman Sachs issued over 20 CDOs in its "Abacus" series worth a total of $10.9 billion.^[81]

These securities performed poorly for long investors; by April 2010, at least $5 billion worth of the underlying reference assets had either been downgraded to sub-investment grade ratings or defaulted.^[82]

Goldman Sachs was accused of setting up and shorting the $800 million Hudson Mezzanine CDO, issued in 2006, with the goal of removing subprime securities from its books. While the prospectus of the CDO described the portfolio contents as assets sourced from the secondary market, critics noted the selection effectively acted as a short position against the firm's existing housing book. Following subsequent mortgage defaults, holders of the long position paid out approximately $310 million to the counterparties holding the short position.^[80]

In public statements, Goldman Sachs claimed that it shorted simply to hedge and was not expecting the CDOs to fail. It also denied that its investors were unaware of Goldman Sachs's bets against the products it was selling to them.^[80]

1MDB scandal

Between 2011 and 2013, Goldman Sachs underwrote approximately $6.5 billion in bond offerings for the Malaysian sovereign wealth fund, 1Malaysia Development Berhad (1MDB), which generated roughly $600 million in fees for the bank, 10 times the normal amount. Goldman Sachs was accused of ignoring major red flags and enabling a massive multi-billion-dollar theft by former Malaysian Prime Minister Najib Razak and Jho Low.^[101][102] In 2015, regulators launched investigations into the transactions, focusing on compliance failures under the Bank Secrecy Act and foreign bribery laws.^[103] In October 2020, Goldman Sachs settled the accusations by paying $2.9 billion in fines and penalties to authorities in the United States, Malaysia, Singapore, and the United Kingdom, while its Malaysian subsidiary pleaded guilty to criminal charges.^[104][105]