Goldman Sachs earns staggering $3.3Billion in First Quarter despite of SEC’s fraud allegations.

Tuesday, April 20, 2010

Goldman Sachs Group Inc. said Tuesday its first-quarter earnings almost doubled to $3.3 billion as its trading business again surpassed the rest of the financial industry. Company executives, again defending the bank against government civil fraud charges, said Goldman Sachs would "never intentionally mislead anyone."

Goldman Sachs earned $5.59 a share on revenue of $12.78 billion as bond, commodities and currency trading buoyed its profits for yet another quarter. That was well above expectations of analysts surveyed by Thomson Reuters. It was Goldman's second most profitable quarter since going public in 1999. In the fourth quarter, Goldman Sachs earned a record $4.79 billion.

The charges against Goldman Sachs took investors by surprise. The company's stock fell almost 13 percent on Friday, although it has recovered somewhat since then. In preopening trading, the stock rose more than 2 percent, a sign that investors found Palm's discussion of the case satisfactory.

Palm repeated the company's statement that it did not know charges were going to be filed against it.

The SEC alleges that Goldman Sachs did not tell two clients that the CDOs they bought were crafted in part by billionaire hedge fund manager John Paulson, who was betting on them to fail.

The two clients, the German bank IKB Deutsche Industriebank AG and the financial consulting firm ACA Management LLC, "were institutions with significant resources and extensive experience in the CDO market," Palm said.

"We would never intentionally mislead anyone," Palm said.

Goldman Sachs, which has outperformed other financial companies for years, has been the strongest bank throughout the financial crisis. It had less exposure to toxic mortgage-related securities than other companies and also has been more aggressive in its trading.
Goldman Sachs also said Tuesday that the executive at the center of the civil fraud case is voluntarily taking some time off from work.

Fabrice Tourre, who was named in the SEC lawsuit against the firm, is taking a break from his position at the firm's London offices, Goldman Sachs spokesman Michael Duvally said.

"It is voluntary. He decided to take some time off," Duvally said.
Tourre was a vice president in his late 20s when the alleged fraud was orchestrated in 2007. Tourre, the SEC said, boasted to a friend that he was able to put such deals together as the mortgage market was unraveling in early 2007.
Tourre, 31, has since been promoted to executive director of Goldman Sachs International in London.

Source: AP

Related Posts:

0 Feedback:

Site Meter