Goldman's last million-share man set to go as partnership fades
He took on the sheriff of Wall Street, Eliot Spitzer. He jousted with an angry Congress. He contained scandals that, at times, reached into the bank’s innermost sanctums.
For two decades, Greg Palm has waged one battle after another for Goldman Sachs. Now, at 70, he’s ready to step aside as its top lawyer.
In fact, he was due to leave last year but his departure got pushed back, according to people with knowledge of the matter. Investigations of Goldman Sachs’s work tied to Malaysian investment fund 1MDB have been heating up. Still, Palm is expected to depart in the coming weeks, with his co-general counsel firmly in control of the 1MDB negotiations, the people said.
For now, the exit of Lloyd Blankfein last month has handed the long-time legal chief a mantle held by few: Nobody at the firm today owns more of its stock than Palm, with a kitty of a million shares. Odds are no employee will ever accumulate so many again. He belonged to the partnership before the bank’s initial public offering in 1999 — a cohort that’s disappearing as a generational shift sweeps across the bank.
“Not sure we ever solved a problem completely, but we always had a collegial relationship,” said Spitzer, who rose to governor of New York after cracking down on Wall Street banks as the state’s attorney general. “An entity as big as Goldman is going to have issues that crop up. Greg will deservedly go out with plaudits.”
A company spokesman declined to comment on Palm’s behalf.
For his role at the forefront of Goldman Sachs’s toughest battles, Palm has been rewarded generously by his employer. He’s pulled in about $500 million, including about $180 million worth of Goldman shares, as well as dividends, distributions from firm-managed funds and proceeds from stock sales, according to data compiled by Bloomberg. That ranks him among America’s wealthiest corporate lawyers and the richest people working within any global investment bank, underlining his persistent importance to Goldman over 26 years.
“A lot of people doing what he has done would have burned out a long time ago,” said Stephen Cutler, who spent nine years as JPMorgan Chase’s general counsel. “It’s a testament to Greg that he’s been there for as long as he has in that critical role.”
The lithe lawyer’s finances were looking less rosy around the time of the 2008 credit crisis. Palm, facing an unexpected cash squeeze, was essentially bailed out by the firm, which bought up some of his illiquid stakes in its investment funds for $38 million. The move helped Palm avoid cutting his stockholding in the bank, which could have spooked investors.
He’s seen through several changes at the helm, working especially closely with Hank Paulson, the former chief executive who left to become U.S. Treasury secretary, as well as with Blankfein, who rose to the top at a time when U.S. regulators were turning up the heat on Wall Street firms.
“I relied very heavily on him for his advice and judgment,” Paulson said. “He is smart as a whip, knows the law cold and understands the investment banking business.”
The soft-spoken general counsel cut a contrasting image to Blankfein, an extrovert with a big personality. Yet while Palm’s relatively droll humor occasionally rubbed some senior executives the wrong way, the pair grew close over the years, according to a former partner who worked with them.
Neither hail from the elite backgrounds that produce many other Wall Streeters. Palm was raised in a rural town along the Chenango River in upstate New York. He rode a scholarship to the Massachusetts Institute of Technology where he studied economics, physics and math — a somewhat eclectic start for a lawyer-to-be. He then went on to Harvard where he got his J.D., as did Blankfein, who had grown up in Brooklyn.
After Harvard, Palm clerked for a prominent appellate judge, working such long hours that he became known for sleeping in the chambers at least two nights a week. He went on to apprentice for Supreme Court Justice Lewis Powell.
It was Powell who recommended Palm to Sullivan & Cromwell, the white-shoe law firm that’s long catered to Wall Street. After leading S&C’s corporate practice, Palm joined Goldman Sachs in 1992. It was a somewhat unusual move at a time when successful attorneys considered the role of an in-house lawyer to be a backwater posting.
“When I started, major financial institutions used to rely on outside law firms for their key legal advice,” said Rodge Cohen, a doyen in the world of Wall Street lawyers. “Greg was one of the forerunners of the general counsel being the true legal adviser for the financial firm.”
Palm’s been busy in recent years. He testified before the Senate Banking Committee as the government bailed out the financial industry in 2008. And he later fought a high-profile battle to defend Goldman Sachs as it was vilified over claims it had cheated investors in securities tied to mortgages.
That included tense negotiations with the SEC, which had sprung a surprise lawsuit over what came to be known as the Abacus scandal. He annoyed SEC officials by his unwillingness to express remorse for Goldman Sachs’s actions, according to a person familiar with the negotiations. Eventually, the bank paid a record fine and admitted it made “a mistake” in marketing materials.
Last year, the firm added a co-general counsel, Karen Seymour, also from Sullivan & Cromwell. Seymour, famous for having prosecuted Martha Stewart, has been shepherding the firm’s 1MDB negotiations as authorities around the globe look to extract a big fine from Goldman Sachs.
At an event last year, another Sullivan & Cromwell litigator joked about an aspect of Palm that’s rarely seen.
“Greg also has a competitive side,” Bob Giuffra said. “When settling with the government, his one rule: We pay less than JPMorgan.”