The curious case of Goldman’s disappearing December

By Felix Salmon
April 15, 2009

As far as its financial statements are concerned, Goldman Sachs’s 2008 ended in November. Its 2009 began in January. In between was possibly the worst month in its history.

Heidi Moore is charitable:

The move effectively eliminated a very ugly month from Goldman’s official annual financial results for both 2008 and 2009, although that was likely not the bank’s intent.

John Hempton is less so:

Am I surprised that Goldies had an “orphan month” and stuffed the bad news in it? No. If you were – then obviously you are new to investment banking.

I suspect that when it comes to bonus time at Goldman, December 2008 will never matter. The 2008 bonuses will be paid based on the 2008 fiscal year, while the 2009 bonuses will be paid based on the 2009 fiscal year. And those $1.3 billion of losses in December — losses which will never show up in any annual report — will be conveniently ignored by the compensation honchos.

Attention Eliot Spitzer: just when you think things can’t get any more shameless, they do. Your hopes that stakeholders will finally start throwing their weight around when it comes to compensation will never come to pass.

Update: Goldman tells Floyd Norris that “the change in fiscal year was required when it converted to a bank holding company”. But as Norris notes, relegating the December results to “a table deep in the announcement” was not in the requirements.

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Comments
6 comments so far

The move was requested by the regulators.
“The spokesman did tell me something I would have included in my earlier Goldman blog had I known it, that the change in fiscal year was required when it converted to a bank holding company.”
http://norris.blogs.nytimes.com/2009/04/ 14/what-about-that-other-195-billion/

Actually, Felix, GS reserved $744MM in comp for December, against net revenues of $183MM. That’s a good part of why they lost so much money in Dec. They shouldn’t be so smarmy about keeping comp to “only” 50% of net revenue in Q1, considering how they’re paying 400%+ of net revenues for Dec.

Posted by Richard | Report as abusive

Congrats felix…you’re just another lemming

why don’t you take a look at an sec filing every once in a while? That may restrict your daily posts to 18 instead of the regular 29, but at least you’ll be able to pretend a little bit better that you know what you are doing. Just not very rigorous.

Posted by anon | Report as abusive

The SEC 8-K is just a notification of a press release that most large companies use to release earnings before their books are totally finalized. This finalized result is put in the 10-Q or K, which gives much more detailed financial and operational results.

Posted by Aiden | Report as abusive

This was a juicy one — the phantom month. Just like the AIG bonus scandal (150MM != 150B). Or the AIG counterparty scandal. But when you just crack the surface a little bit, none of the stories have any depth.

Does anyone even pay attention to the CPI numbers today? 60 pct of the inflation negation came from one item. Ah, but CPI is boring…

I am completely agnostic as to whether GS evil or honorable, but you guys are really INSULTING THE INTELLIGENCE of REAL investors. Firstly, I have known GS will have a bad Dec for months. It’s such an old news! Most analysts touched on December as they projected the 1st quarter earnings estimates. Secondly, on the earnings conference call, GS CFO spent the first several minutes reviewing their December numbers before he kicked off the quarterly earnings report.

Posted by topcat616 | Report as abusive
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