Donor Goldman To Staff: Don't Campaign On EU

Goldman Sachs (NYSE: GS-PB - news) has warned its staff against endorsing either side of the European Union (EU) referendum campaign despite donating hundreds of thousands of pounds to the group leading the push to avoid Brexit.

Sky News has obtained a memo circulated on Wednesday to 6,000 Goldman Sachs employees in Europe, the Middle East and Africa - most of whom are based in London.

It (Other OTC: ITGL - news) said that the firm's decision not to register with the Electoral Commission as a campaigning organisation meant that employees should "not distribute any material which could be seen as campaigning for either outcome or endorsing the messages of either campaign".

The instruction is designed to ensure that Goldman staff do not fall foul of the Electoral Commission's guidelines on permitted activities by businesses ahead of the 23 June poll.

Other banks including Bank of America Merrill Lynch and Credit Suisse (LSE: 0QP5.L - news) have issued similar guidelines, although neither has donated funds to either side of the campaign.

"Breaches may result in legal and regulatory action against companies, company directors and officers, or senior managers who have authorised a breach of the rules," the Goldman memo warned.

On Wednesday, the Electoral Commission designated Britain Stronger in Europe (BSiE) - the recipient of a £500,000 donation from Goldman - as the lead group for the UK to remain in the EU.

The Wall Street bank now finds itself in the curious position of helping to bankroll the 'Remain' campaign while being prohibited from actively endorsing it between 15 April, when the referendum clock formally starts ticking, and 23 June.

Under the rules, companies must not spend more than £10,000 on referendum-related activities unless they have registered with the regulator.

A number of senior company executives say that the Electoral Commission's guidance has been confusing, and may result in them refraining from intervening further in the debate before the vote takes place.

Goldman told staff that they may "continue to engage with clients on the consequences of a potential UK exit from the EU" and that they can distribute research and sales material referring to the possible referendum outcomes as long as they are "described in a balanced way".

The firm also said, however, that clients must not be surveyed about their views on the referendum, adding that any events organised to discuss the EU in which clients or employees are involved "must have both sides equally represented".

Goldman is not the only Wall Street firm to have made a financial contribution to BSiE: Sky News revealed on Wednesday that Citi had given a sum thought to be in the region of £200,000 to the group .

JP Morgan and Morgan Stanley (Xetra: 885836 - news) have also donated.

The decision to do so reflects the anxiety among Wall Street executives about the potential economic disruption that they believe a British exit from the EU would cause.

In the banking sector, possible restrictions on the UK's ability to access the EU's single market in financial services, and the wider corporate uncertainty created by Brexit have prompted US banks to put their money where their mouths are.

The rules governing official campaign spending mean that both the officially-designated 'In' and 'Out' groups can spend £7m in the final 10 weeks before the poll.

However, the Government angered pro-Brexit campaigners last week when it emerged it was spending more than £9m on a leaflet to explain to voters why it believed the UK should vote to remain in the EU.

Goldman's in-principle support for the UK's membership of the EU is long-standing.

In 2013, the co-chief executives of Goldman Sachs International wrote that Brexit would be economically risky, warning that "large international and European companies [would] see a Britain divorced from the EU as a much less attractive place".

Goldman declined to comment on the memo.