Goldman Sachs profit tops forecast, UK opens probe

April 20, 2010

A security guard walks through Goldman Sachs lobby in New York   By Steve Eder and Steve Slater
   NEW YORK/LONDON, April 20 (Reuters) – Goldman Sachs Group Inc <GS.N> said first-quarter earnings nearly doubled, and Britain’s financial regulator launched a formal probe related to civil fraud allegations against the Wall Street bank. 
   Goldman’s results came four days after the firm was accused of fraud by the U.S. Securities and Exchange Commission in the structuring and marketing of a debt product tied to subprime mortgages.
   “On the face of it, Goldman’s numbers are pretty good, which they do time and time again,” said David Morrison, market strategist for GFT Global Markets in London. “Investors will want to focus on the blow-out numbers, but the news the FSA is also probing the firm takes some of the shine off.”
   Goldman said net income rose to $3.29 billion, or $5.59 per share, from $1.66 billion, or $3.39 per share, a year earlier. [ID:nN20251055]
   Analysts on average had forecast $4.01 per share, according to Thomson Reuters I/B/E/S.
   Goldman Sachs shares rose 1.3 percent in premarket trading.
   Goldman emerged as Wall Street’s most influential bank after the financial crisis but has faced a backlash over its pay and business practices.
   The bank’s co-general counsel, Greg Palm, launched a rebuttal of the SEC charges during the bank’s earnings conference call.
   Palm said the firm was “very disappointed” that the SEC had brought charges and insisted that Goldman “would never mislead anyone.”
   He also said investors who lost money on the subprime mortgage product that is the focus of the SEC suit had a wealth of experience and background in such deals.
  
   ‘RECKLESSNESS AND GREED’
   Goldman’s forecast-beating earnings came as Britain’s Financial Services Authority (FSA) said it had started a formal investigation into Goldman Sachs International in relation to the SEC allegations. FSA said it would work closely with its U.S. counterpart. [ID:nLDE63J0TP]
   UK Business Secretary Peter Mandelson said on BBC Radio, “We have got to look at the whole system of constituting and regulating banks. We need a system of regulation, a system of levying banks, which is internationally applied.”
   Nick Clegg, leader of the Liberal Democrats, the UK’s third-largest party, said the allegations against Goldman “are a reminder, if we needed one, of the recklessness and greed that disfigured the banking industry as a whole.”
   In the United States, political tensions were heightened by reports that the five SEC commissioners split along political lines last week in a vote on whether to file suit against Goldman. The three Democrats voted in favor of the legal action, while the two Republicans opposed it, according to press reports.
   “I have my doubts about this attack on Goldman Sachs, for the simple reason that with two members of the SEC clearly against the indictment, it doesn’t make (SEC Chairman) Mary Schapiro’s job any easier,” said David Buik, senior partner with BGC Partners in London. (Writing by Christian Plumb; Additional reporting by Douwe Miedema and Jon Hopkins in London; editing by John Wallace) ((Reuters Messaging: christian.plumb.reuters.com@reuters.net +1 646 223 6134)) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com      * BridgeStation: view story .134                              For more information on Top News: http://topnews.reuters.com)) Keywords: GOLDMANSACHS/ 
  
For Related News, Double Click on one of these codes:[C] [D] [E] [M] [O] [T] [U] [MTL] [GRO] [SOF] [OIL] [MNI] [NAT] [ELN] [NAW] [G] [UKI] [EMK] [RINVM] [CAN] [NEWS] [US] [USC] [DBT] [BSVC] [DFIN] [FINS] [BANK] [BNK] [FIN] [FUND] [HEDGE] [RES] [INVB] [CDM] [CORPD] [BISV] [INVM] [INVS] [BACT] [LEN] [RTRS] [GS.N]
 For Relevant Price Information, Double Click on one of these codes:<GS.N>
 Tuesday, 20 April 2010 13:49:12RTRS [nN20251740] {EN}ENDS

508 comments

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