Key Takeaways:
Goldman Sachs' former general counsel Kathryn Ruemmler didn't leave the bank at the end of June as planned, and her continued presence in an advisory role is complicating the search for her successor while she prepares for congressional testimony over her ties to Jeffrey Epstein.
Ruemmler stepped down as chief legal officer and general counsel in February after Justice Department documents showed she had extensive communications with Epstein from 2014 to 2019, including accepting gifts and advising him on media inquiries about his crimes. She agreed to stay on as senior counsel to help with the transition, a decision that has reignited concern inside the bank and made external candidates wary of taking the top legal job, according to people familiar with the matter.
"Ms. Ruemmler has been open and transparent about her interactions with Jeffrey Epstein when she was a defense lawyer in private practice many years ago. She did nothing wrong and had nothing to do with Epstein's crimes," said Jennifer Connelly, a spokeswoman for Ruemmler.
Ruemmler is set to appear before the House Committee on Oversight and Government Reform on Wednesday as part of its investigation into Epstein and his associate Ghislaine Maxwell. The committee has interviewed former President Bill Clinton, Commerce Secretary Howard Lutnick and Microsoft founder Bill Gates as part of the probe. Ruemmler's testimony will focus on how Epstein built and maintained wealth and influence while operating a sex trafficking network, according to Democratic Congressman Raja Krishnamoorthi, who sits on the committee.
The search for Ruemmler's replacement began in February after Goldman Chief Executive David Solomon announced her resignation, saying the media coverage had made it hard for her to execute her job. Goldman retained Spencer Stuart to fill the role, which paid Ruemmler about $25 million in compensation last year. She has been vetting candidates and has left some people with the impression that Michael Bosworth, the acting general counsel and her former deputy, might not be ready for the top job, according to people familiar with the discussions.
Some external lawyers who have been approached for the role have expressed concern that Ruemmler's close relationship with Solomon and the board could mean she would hover over the new general counsel, the people said. Ruemmler has supporters on the board, including lead director David Viniar, a former Goldman executive who approved her staying beyond June. She has also accused other Goldman executives of leaking to the media and contributing to the coverage that led to her resignation, according to people familiar with the matter.
Goldman spokesman Tony Fratto said Ruemmler has "agreed to stay at Goldman Sachs only through a transition to a new General Counsel" and that Solomon is leading the search. He noted that a prior general counsel stayed on as co-general counsel and then in an advisory role for two years given the complexity of the position. "There's overwhelming interest in the position," he said.
The Epstein documents released by the Justice Department showed Ruemmler exchanged numerous emails with the convicted sex offender, including banter where she called him "Uncle Jeffrey," and that Epstein listed her as a backup executor of his will. He also called her cell phone when he was arrested on July 6, 2019, according to law enforcement notes. Ruemmler's spokeswoman said it was a brief call and she took no action afterward.
Russell Horwitz, who recently retired as Goldman's chief of staff, raised concerns internally about Ruemmler's emails and the potential reputational impact on the bank, according to people familiar with the discussions. Ruemmler has said she regrets knowing Epstein and maintained their relationship was professional, based on a shared mutual client, the Swiss bank Edmond de Rothschild Group.
The ongoing leadership uncertainty comes at a time when Goldman faces a complex regulatory environment and a shifting interest-rate landscape. Each 25-basis-point Fed cut affects the bank's net interest income, and the legal department plays a central role in navigating compliance and litigation risks. The bank's shares closed down 0.7 percent on Monday at $1,047.45.
This article is for informational purposes only and does not constitute investment advice.
