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Profits at Goldman Sachs top $3bn Profits at Goldman Sachs top $3bn
(21 minutes later)
US bank Goldman Sachs has seen its profit for the first quarter of 2010 nearly double.US bank Goldman Sachs has seen its profit for the first quarter of 2010 nearly double.
The bank reported net earnings of $3.46bn (£2.25bn) for the three months to March, up from $1.8bn a year ago.The bank reported net earnings of $3.46bn (£2.25bn) for the three months to March, up from $1.8bn a year ago.
Goldman also revealed that it paid its employees about $5.5bn in compensation, equivalent to 43% of its revenue.Goldman also revealed that it paid its employees about $5.5bn in compensation, equivalent to 43% of its revenue.
Earlier, the UK's Financial Services Authority (FSA) announced a formal enforcement investigation into the bank regarding recent fraud allegations.Earlier, the UK's Financial Services Authority (FSA) announced a formal enforcement investigation into the bank regarding recent fraud allegations.
The results were ahead of Wall Street expectations, with revenue coming in at $12.8bn, beating forecasts of $11bn. 'Spectacular figures'
In light of recent events involving the firm, we appreciate the support of our clients and shareholders Lloyd Blankfein, Goldman Sachs chief executive
The results were ahead of Wall Street expectations, with revenue coming in at $12.8bn, up 36% on the year, and beating forecasts of $11bn.
BBC business editor Robert Peston described the results as "another spectacular set of figures".
Shares in the bank rose more than 1% in pre-market trading.Shares in the bank rose more than 1% in pre-market trading.
UK investigation Goldman's $5.5bn pay pot is spread across the bank's 33,100 employees, implying an average of $166,000 each.
The FSA's earlier announcement followed claims made by the Securities and Exchange Commission (SEC) in the US that Goldman defrauded investors during the sub-prime housing crisis. However, the proportion of compensation to revenues was lower than it paid a year ago, when it set aside 50% of revenues for remuneration.
Goldman has strongly rejected the SEC's claims as wrong "in fact and law" and said it would co-operate with the FSA. "In light of recent events involving the firm, we appreciate the support of our clients and shareholders, and the dedication and commitment of our people," chief executive Lloyd Blankfein said in a statement.
The UK watchdog said it would liaise closely with the SEC in its review. UK inquiry
The FSA's earlier announcement followed claims made by the Securities and Exchange Commission (SEC) in the US that Goldman had defrauded investors during the sub-prime housing crisis.
The FSA's decision to investigate Goldman... is another embarrassment for the world's most successful hedge fund Robert Peston, BBC business editor Read Robert's blog
On Friday, the SEC issued civil charges against Goldman, alleging that it failed to disclose conflicts of interest during the marketing of sub-prime mortgages in which investors lost $1bn.
The SEC said Goldman failed to disclose "vital information" that one of its clients, Paulson & Co, had helped to choose which securities were packaged into the mortgage portfolio. These securities were sold to investors in 2007.
Goldman has strongly rejected the SEC's claims as wrong "in fact and law".
The FSA has said it will liaise closely with the SEC in its review. Goldman has said it will co-operate with the FSA.
It is unusual for the FSA to announce the beginning of a formal investigation. It is understood that the investigation process typically takes months, if not years.
The enforcement division of the FSA will now have powers to demand that Goldman provide it with documentation such as records of transactions and records of telephone calls.
If the watchdog finds Goldman at fault, it could impose a fine on the bank.
Bruce Packard, banking analyst at Seymour Pierce, said "it seems like it is just starting".
"I've always been slightly surprised that investors haven't gone after the investment banks in the way they did after the internet bubble."
On Sunday, Prime Minister Gordon Brown called for the FSA to launch an inquiry into Goldman Sachs.
"Hundreds of millions of pounds have been traded here and it looks as if people were misled about what happened," he said. "I want the Financial Services Authority to investigate it immediately."