Goldman Sachs probably wishes it made more than $2 million off underwriting a sale of state securities now that there’s a scandal that’s blowing up like this.Of course this comes after a terrible PR week for Goldman.
The latest news, first reported by the Boston Globe, is that the SEC is investigating whether Timothy Cahill, a Massachusetts former Treasurer, and his former aide, 36-year old Neil Morrison, improperly contacted one another after Morrison left the government to work for Goldman Sachs.
Probably the worst that could have happened is that Morrison made a donation to his former employer’s (Cahill’s) campaign as a kickback for the Massachusetts government’s hiring his current employer, Goldman, to sell a package of securities for the government in the summer.
But the state government has hired Goldman before.
The New York-based firm has been senior banker on about $7 billion of Massachusetts and agency bonds since 2001.
It all started when Goldman was hired in June 2010 to sell securities for the state government. Morrison was working for Goldman at the time.
According to Reuters:
Morrison, who left the Treasurer’s office in 2006 and joined Goldman in 2008, helped negotiate a $456 million bond deal in 2010 with a state water-pollution control board that Cahill chaired and operated within the treasurer’s office.
Goldman earned an estimated $2 million from the deal.
Then in December, Goldman asked that it be removed from the list of firms underwriting the bond deal because Morrison had made a donation to Cahill’s campaign — which he wasn’t allowed to do.
Goldman Sachs Group Inc. asked to be removed from two state underwriting teams in Massachusetts after Neil Morrison, the firm’s Boston-based public-finance banker, helped Treasurer Tim Cahill’s failed run for governor.
Also in December, a spokesman said Cahill didn’t even work for Goldman anymore.
The pair still kept in contact probably at least in part because they knew and worked with each other for so long — since at least 2003, according to the state press release about his appointment excerpted below.
Neil Morrison was sworn in as Deputy Treasurer in 2004, and promoted to First Deputy Treasurer on January 5, 2006. Neil will oversee the Massachusetts State Lottery, the Alcoholic Beverages Control Commission, the Pension Reserves Investment Management Board and the Treasury’s Executive Office.
Neil joined Treasurer Cahill’s administration in 2003. Prior to being named Chief of Staff in 2004, he served as Assistant Treasurer of Human Resources. He also oversaw the successful transition of the Alcoholic Beverages Control Commission from the Executive Office to the Treasury and served as Interim Chair of the ABCC. Prior to joining the Treasury, Neil served as the Director of Personnel for the City of Taunton and also served as a member of the Taunton City Council.
Neil is a graduate of Boston College and Suffolk University Law School. He lives in Taunton with his wife.
But the SEC is investigating the issue because Morrison allegedly sent an email to people working with Cahill during work hours.
The probe allegedly focuses on an email Morrison, who was listed as a top political adviser” by Cahill, reportedly sent during work hours from a private email account to consultants working on Cahill’s gubernatorial campaign.
The details of the email, according to the Boston Globe, are as follows:
Morrison sent [the e-mail] from his private account to two consultants for the campaign, in which he accepts, on Cahill’s behalf, the terms of a contract between the campaign and the consultants.
The SEC’s investigation is ongoing and we’ll have to wait to see what comes of it. For now, the SEC has sent the firm subpoenas, which seek e-mails, phone records, schedules, files, and memorandums.