Goldman Sachs Capital Partner

Posted on January 03, 2012 by Admin
Goldman Sachs Capital Partner

Goldman Sachs Capital Partner

The storied firm earned $3.46 billion, amounting to $5.59 a share and a surge of 91% over last year’s results. Even more impressive, this year’s first-quarter earnings were $1.50 a share above consensus estimates of securities analysts. Revenues jumped 36% to $12.78 billion.

SEC Shows New Leadership in Charges Against Goldman Sachs

But the earnings report is not the big story for the world’s most successful investment banker, a financial juggernaut that earns $220,000 per employee. The SEC, in an unaccustomed role of late, filed a law suit and rained on the company’s parade.

The commission is showing signs of renewed life, under new chair Mary Schapiro. On April 16 the federal securities regulator filed a civil complaint against Goldman, charging fraud in its lack of full disclosure to certain investors in 2007.

Investment Community Still Reacting to Financial Meltdown

The case has roiled the investment community, still smarting over receiving public blame for the financial meltdown of 2007-2008. Goldman Sachs (GS) is certainly not a heroic David in this tale, and is rapidly being portrayed as the greedy Zeitgeist of the current decade of excessive consumer spending.

Call it credit card capitalism gone amok – an economy pumping out easy money for consumer goods, automobiles and housing. The American Dream gets whacked by abuse of plastic steroids.

SEC Allegation Alleges Non-disclosure of Material Facts

In regard to the complex 2007 deal gone sour, the SEC alleges that Goldman Sachs arranged for investors to buy bonds promising future income from the cash flow of sub-prime mortgages. According to the complaint, this was done after another client, the hedge fund Paulson & Co., cherry-picked a batch of very high-risk mortgages for inclusion in the bonds.

Simultaneously, Paulson & Co. purchased derivatives called credit default swaps, a form of insurance guaranteeing itself a payoff if the bonds went into default.