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High Profile Wall Street Case Leads to Global Attention

With the market-moving news that the Securities and Exchange Commission (SEC) filed a civil fraud action against Wall Street’s most prestigious investment bank, Goldman Sachs, the fight for the company’s reputation continues, and moves to an entirely new level.

The timing of this action (the Friday before a busy week in the U.S. Senate, as it takes up the Obama Administration’s financial reform package) has simultaneously raised eyebrows across the financial markets and provided an opening for global audiences, most notably UK Prime Minister Gordon Browne, to add their voices to this matter. That senior Administration officials appeared on the Sunday talk shows to talk about the pending legislation, but then passed on directly commenting on Goldman Sachs, only made the elephant in the room even larger.

At its core, this issue with Goldman Sachs is much more than the case at hand. It is a reminder that the blame and recrimination from the 2008-2009 economic meltdown is far from spent. It is a clear warning shot across the bow of a wide array of other financial institutions that they could be next. That’s the next logical move for an SEC that made a point not to let Goldman Sachs know the suit was being filed on the day that it was (and it should be noted that since the SEC brought such a big case, it is completely confident that it can win, and not just settle). Simply put, this is a reminder that any product involving mortgage-related issues will be reviewed with renewed skepticism.

The biggest kid in the schoolyard was just given a bloody nose – and now everyone has stopped to take a look. The real question is whether the bloody nose is from a strong right cross (a one-time event), or some ailment that is far more chronic.

So for firms and companies whose services and products are being unfairly affected, what can they do? In fact, the SEC’s action against Goldman Sachs draws the perfect roadmap: embrace regulatory oversight; work to ensure that every professional financial counselor who interacts with clients is well trained; when opportunities arise to demonstrate and organization’s transparency, jump at them; and highlight customers who are pleased with the services they received (and tell their stories in pictures as well, whenever possible).

With more to come in the Goldman Sachs case, not to mention other banks that may come under the regulator’s microscope, the media and financial markets will dwell on this alleged wrongdoing for some time. To the extent that continuing to punish those with products that many be perceived as among the proximate causes of the nation’s current economic situation proves politically rewarding, look for others (notably State Attorneys General) to join the effort.

For now, companies with valued and valuable products can still take advantage of the window of opportunity that exists to build and strengthen their brands, lest they be the next target.

Michael W. Robinson is a Senior Vice President and Chair of the Corporate Practice at Levick Strategic Communications, the world’s top crisis firm. He is also a contributing author to Bulletproof Blog™. Connect with Levick on Twitter: @Levick.

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