Price of reputation

16 July 2010 By Chris Hughes

The Wall Street bank seems to have got off lightly with its $550 mln SEC settlement, while the UK oil major has stopped oil flowing into the Gulf. But both companies’ market capitalisations have lost more than the quantifiable cost of each episode. The missing link? Reputation.

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Goldman Sachs said on July 15 that it had settled fraud charges filed by the U.S. Securities and Exchange Commission in April, agreeing to pay a $550 million fine and without admitting liability. The Wall Street bank's shares closed up 4.4 percent at $145.

BP said on July 15 it had temporarily stopped the flow of oil from its stricken Gulf of Mexico well after testing a new containment cap placed over the leak that has flowed since an accident on April 20. However, it stressed that this was not a permanent solution. The UK oil major's shares rose 3.9 percent in early trade in London on July 16, to 418 pence.

Goldman shares have fallen 21 percent since the SEC filed charges, while BP's have fallen 36 percent since the spill began. The MSCI World Index is down 10 percent since April 15.

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