Gary Cohn is
walking away from a career at Goldman Sachs to become President Trump's top
economic adviser with a stunning $285 million.
Goldman's
willingness to give Cohn a chunk of that fortune ahead of schedule is causing
unease among ethics experts, who say the huge payout will make him beholden to
the Wall Street firm he worked at for 25 years. They say that Cohn should have
to recuse himself from Trump administration matters linked to his former firm.
Goldman
Sachs (GS) is immediately paying Cohn $65 million in cash in exchange for the
stock awards he earned in recent years, the company said in a filing.
That stock
would normally be tied up for several years, but Goldman said it accelerated
the payout so that Cohn can sever ties with the firm to become director of the
National Economic Council in the Trump administration.
Cohn put out
a separate filing on Tuesday saying he had taken possession of a total of $220
million in stock from a trust that had been controlled by his family. Goldman
lifted restrictions ahead of schedule on $35 million in stock awards and
another $23 million in stock as part of this amount too.
That means
Cohn is walking away from Goldman with roughly $285 million, minus a portion
the firm withheld so that he can pay taxes. All this doesn't include Cohn's
2016 compensation of more than $7 million.
Much of
Cohn's money was earned after decades of helping to build Goldman Sachs into a
Wall Street powerhouse. Technically, Cohn could have sold his unrestricted
shares at any time, but senior execs typically don't do that to signal they
have confidence in their company.
The real
issue for ethics experts is that Goldman allowed Cohn to also receive the stock
that would normally be locked up.
"The
Goldman Sachs cash and stock payments present a serious ethics issue,"
said Lawrence Noble, general counsel at the Campaign Legal Center and a CNN
contributor.
"This
type of payment clearly calls into question whose interests Mr. Cohn will be
representing as director of the National Economic Council," Noble said.
Noble
believes the payments appear to qualify as "extraordinary payment,"
under which federal regulations require government officials to recuse
themselves. These payments must exceed $10,000 and be made by a company after
it became known that an individual was being considered for or had accepted a
government position.
Norm Eisen,
a fellow at the Brookings Institute who served as President Obama's ethics
czar, also raised the question of whether Cohn's Goldman payday comes under an
"extraordinary payment."
If so, Eisen
said "then Mr. Cohn should be recused from any matters in which Goldman is
a party or represents a party for two years."
That
requirement is spelled out in federal regulations.
Given that
Goldman represents countless clients around the business world, a two-year
recusal could impair Cohn's ability to do his job.
It's not
clear if the Office of Government Ethics will require Cohn to recuse himself
because no ethics agreement has been posted on the agency's website for Cohn.
But Goldman
noted in its filing that Cohn "received guidance" from the White
House Office of General Counsel, in coordination with the OGE.
"The
only reason we accelerated delivery of Mr. Cohn's shares is to allow him to
comply with the conflict of interest rules established by the U.S.
government," Goldman told CNNMoney in an email.
White House
spokeswoman Natalie Strom said that Cohn "followed all necessary rules and
regulations" to join the administration and confirmed that he won't
receive a salary in his new role.
"President
Trump has established an extraordinary group of compliance officials to ensure
that every person" in the administration "meets the appropriate ethical
standards," Strom said in an email.
To which,
Eisen said: "Even if this turns out to be legal, that doesn't mean it's
right."
Source: CNNMoney
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