Goldman Sachs (GS) has been forced to bail out several of its executives who borrowed heavily against their shares to make risky private equity and hedge fund investments. As Goldman Sachs (GS) stock dropped, and these investments went into the toilet, several have been forced to borrow against future earnings to avoid going broke.
Now comes word that it’s helped two more execs, including Jon Winkelreid, the President and co-COO who recently left the firm. This time though, they didn’t give out loans, rather the firm used its money to buy back investments that Winkelreid and General Council Gregory K Palm had made in internal investment vehicles.
NYT: Both executives are among the largest shareholders in the bank, owning more than a million shares each, and directors were concerned that a large sale of Goldman shares by the two men would alarm investors during a period of market turmoil, according to a person briefed on the matter.
To avoid the stock sales, Goldman paid Mr. Winkelried, who retired last month, $19.7 million to purchase about 30 per cent of his investments in internal hedge funds and private equity investments.
The bank paid $38.3 million to Mr. Palm for about a quarter of his investments.
The articles notes that as part of the firm’s deal with Warren Buffett, top execs can’t sell more than 10% of their holdings for four years — an agreement that Winkelreid remains party to, despite having left the firm.