(Bloomberg News) Goldman Sachs Group Inc. saw $2.15 billion of its market value wiped out after an employee assailed Chief Executive Officer Lloyd C. Blankfein's management and the firm's treatment of clients, sparking debate across Wall Street.

The shares dropped 3.4 percent in New York trading yesterday, the third-biggest decline in the 81-company Standard & Poor's 500 Financials Index, after London-based Greg Smith made the accusations in a New York Times op-ed piece.

Smith, who also wrote that he was quitting after 12 years at the company, blamed Blankfein, 57, and President Gary D. Cohn, 51, for a "decline in the firm's moral fiber." They responded in a memo to current and former employees, saying that Smith's assertions don't reflect the firm's values, culture or "how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients."

Former Federal Reserve Chairman Paul Volcker, 84, whose "Volcker rule" would limit banks like New York-based Goldman Sachs from making bets with their own money, called Smith's article "a radical, strong" piece. "I'm afraid it's a business that leads to a lot of conflicts of interest," Volcker said at a conference in Washington sponsored by the Atlantic magazine.

Goldman Sachs slid $4.17 to $120.37 yesterday, leaving the shares still up 33 percent this year. The stock advanced 0.5 percent to $120.98 at 9:33 a.m. in New York today.

Goldman Sachs Disagrees

David Wells, a spokesman for Goldman Sachs in New York, declined to comment beyond the contents of the memo and an earlier e-mailed statement in which the firm said it disagrees with the views expressed in the op-ed.

Executives at Goldman Sachs haven't changed their behavior even after the firm paid $550 million to settle a fraud lawsuit with the Securities and Exchange Commission and was accused by the U.S. Senate's Permanent Subcommittee on Investigations of misleading clients, Smith wrote. The company published a report in January 2011 with 39 recommendations on how to improve its business practices and client focus.

"Over the last 12 months I have seen five different managing directors refer to their own clients as 'muppets,' sometimes over internal e-mail," Smith wrote. "It astounds me how little senior management gets a basic truth: If clients don't trust you they will eventually stop doing business with you."

The article was e-mailed across Wall Street. One employee at Bank of America Corp.'s Merrill Lynch division, a competitor to Goldman Sachs, said his team was told not to send copies to clients. Parodies such as "Why I am leaving the Empire, by Darth Vader" on thedailymash.co.uk and the borowitzreport.com's "A Response from Goldman Sachs" also circulated.