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When Publicity Risk Factors Are Part of Wall Street Financial Reporting

The recent spate of negative press and public outrage at investment bank Goldman Sachs’ compensation of its executives and other practices has reached into a new arena: the company’s SEC-mandated financial filings. The company’s 10-K financial statement filed in early March contained the following extraordinary item:

“The financial crisis and the current political and public sentiment regarding financial institutions has resulted in a significant amount of adverse press coverage, as well as adverse statements or charges by regulators or elected officials,” Goldman wrote. “Press coverage and other public statements that assert some form of wrongdoing, regardless of the factual basis for the assertions being made, often results in some type of investigation by regulators, legislators and law enforcement officials, or in lawsuits.”

In effect, in listing its “risk factors” as required by the SEC, Goldman was claiming the adverse publicity could affect the firm’s share price. The filing goes on to state: “[A]dverse publicity … can also have a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations.” Many factors may have contributed to the 10K decision – fallout from the US Government bailout (since repaid), after-effects of the AIG mess. Perhaps this was a prescient statement. In the past week, Goldman and other banks have come under scrutiny for its role in the current financial crisis in Greece.

CommCore counsels its clients to evaluate corporate communications and public relations implications in its strategic and tactical business decisions and crisis planning, and to monitor press coverage and blogosphere discussions closely. (See our point in “Lloyd Blankfein And Goldman Sachs Represents Wall Street PR Crisis” on
What DID surprise us was finding a blatant internal and external reputation management discussion in a financial filing. This underscores the spreading impact of brand reputation on corporate performance beyond crises such as a consumer product recall at Toyota, physical harm such as a fatal mistake at a hospital, or technological interruptions such as a cell phone service or data delivery blackout.

What do you think? Is Goldman’s inclusion of adverse publicity in its 10-K as a business risk factor a candid statement that elevates reputation management to a higher level of corporate importance? Is it simply genuflection to a PR obligation because, after all, the company’s image IS getting pummeled in the press and on Capitol Hill? Or might it be an indication (or admission?) of a lesson learned the hard way that might lead to serious efforts at reforming the company’s practices?

One Comment


It’s called “covering your ass.” By including “adverse press coverage” and the threat of resulting lawsuits as a risk factor in its 10-k filings, Goldman Sachs is simply giving itself its own bailout clause by which its officers can claim all the bad P.R. they get because of their own excesses and manipulations entitles them to fewer financial and/or criminal penalties once those actions are exposed.

It’s as if I committed a crime, then pled not guilty by reason of being bashed in the press for having committed the crime. Thanks for shedding light on yet another reprehensible practice by a corporation that’s “too big to fail” and too dishonest to reform the very practices that caused it to tank in the first place.

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