Smith, who resigned from Goldman last month, set off a bidding war when he had discussions with several major publishers earlier this week about a book that would include details of what Smith has described as a toxic culture at the famous Wall Street firm, said a publishing industry source.
The final deal was first reported in Friday's New York Post, which said that Grand Central Publishing, an imprint of the Hachette Book Group, paid a $1.5-million advance for the book.
Neither the publishing house nor Smith's literary agent were prepared to comment.
Smith's withering resignation letter, published in the New York Times, called Goldman a "toxic" place with a culture that boasted of ripping off clients. Smith recounted seeing five of the firm's managing directors refer to clients as "muppets" at times on internal e-mails.
The letter captured the imagination of Wall Street and social media websites including Twitter, where Smith instantly became a top trending topic.
Johannesburg-born Smith worked at Goldman's London office in equity derivatives as an executive director.
His op-ed piece was highly unusual because Goldman employees shy away from publicly criticising the bank, both because it breaks the Goldman code of silence and because non-disparagement agreements signed by many employees bar them from speaking negatively about the firm.
Goldman responded to the op-ed by saying Smith's views did not reflect the way the business was run.
Smith, 33, worked in the trading arm of the bank, selling financial products. He reportedly earned £3-million a year.
He grew up in Johannesburg where he went to King David School. His father is a pharmacist who lives in the US and his mother is a social worker.
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