Goldman Sachs posted first quarter profits on Tuesday of 3.46 billion dollars, almost double what the firm earned this time last year - a piece of good news for the investment giant which is battling a British probe into US fraud accusations.
AFP - Investment giant Goldman Sachs on Tuesday posted surging first quarter profits of 3.46 billion dollars, nearly double a year ago, as it battled US government fraud charges.
Net earnings were up a whopping 91 percent against the same three months a year ago, blowing Wall Street expectations out of the water, but raising eyebrows as the firm battled allegations it misled investors about risky mortgage investments.
"Our performance in the first quarter reflects more signs of growth across the economy and the strength of our client franchise," said Goldman chief executive Lloyd Blankfein.
The earnings announcement comes as a special US Senate panel prepared to unveil next week the results of a probe into the role Goldman and ratings agencies such as Moody's played in the subprime mortgage meltdown.
Last week the US Securities and Exchange Commission filed a civil suit against Goldman, alleging it allowed a leading hedge fund to put together a product for investors, which the fund was at the same time betting against.
Meanwhile, Britain's financial regulator on Tuesday also launched a formal investigation in relation to the US fraud charges, London's Financial Services Authority said.
"The FSA will be liaising closely with the SEC in this review," it said in a brief statement.
Goldman pledged to cooperate with the British probe following US fraud charges which it again dismissed as "unfounded".
"We believe the SEC's charges are completely unfounded in law and fact, and look forward to cooperating with the FSA," the bank said in a statement emailed to AFP.
Blankfein, who guided Goldman through the financial crisis and a 10-billion-dollar government bailout, on Tuesday thanked clients and shareholders for their support "in light of recent events."
The company has vigorously denied any fraud as it seeks to defend its reputation as Wall Street's most stable finance house.
That reputation appeared reaffirmed by Tuesday's earnings report, which showed more than 40 percent growth in its investment and trading operations.
But the earnings threatened to be overshadowed by the allegations against the firm.
Much of the company's Tuesday conference call with investors dealt with the fraud allegations, which have rattled markets around the world and sent the company's stock plummeting.
Goldman general counsel Greg Palm said the SEC charges were "very disappointing" but added the firm "would never intentionally mislead anyone."
Palm also sought to deflect allegations that Goldman defrauded ordinary investors, adding that the transaction took place between two institutional investors who "understood the risks they were taking."
"GS had no economic motivation for this transaction to fail," he said.
Goldman, which has claimed it lost more than 90 million dollars in the deal, now faces punitive fines from the SEC if found guilty.
Date created : 2010-04-20