Investment bank Goldman Sachs made $100 million or more trading on the stock market on each of 46 trading days in the second quarter on 2009. In all, the company made at least that much money on 71 percent of the days it was doing business.
And the company revealed Wednesday that the US government is investigating its controversial compensation practices, and, perhaps more importantly, its trading in derivatives -- the financial instruments widely blamed for last year's financial collapse.
According to a report at Bloomberg news service, Goldman's profits are an all-time record -- beating the previous record, 34 days of $100-million profits, set by Goldman in the previous quarter.
Goldman, a major beneficiary of last fall's bank bailouts, by some accounts now controls half of all the program trading (computer-based automatic trading) done on Wall Street.
The company and some affiliates “have received inquiries from various governmental agencies and self-regulatory organizations regarding credit-derivative instruments,” the firm said in a regulatory filing, as quoted by Bloomberg. “The firm is cooperating with the requests.”
The company is also facing questions from shareholders about how it rewards salaries and bonuses, Reuters reported Wednesday. Link Here
GE pays $50M to settle fraud charges.
General Electric, a giant conglomerate that owns manufacturing, media and financial companies, agreed Tuesday to pay $50 million to settle federal charges that it committed accounting fraud over a two-year period.
GE settled civil fraud charges brought by the Securities and Exchange Commission, which alleged that the company used improper accounting methods that allowed it to boost its reported earnings and avoid disclosing negative results.
The alleged violations included the company's accounting for certain loans and sales of trains and aircraft parts, the SEC said, and enabled GE to boost earnings by hundreds of millions of dollars.
"GE bent the accounting rules beyond the breaking point," Robert Khuzami, director of the SEC's Division of Enforcement, said in a statement. "Overly aggressive accounting can distort a company's true financial condition and mislead investors."
As is customary with civil settlements, GE did not admit or deny the allegations. "We have concluded that it is in the best interests of GE and its shareholders to resolve this matter and put it behind us on the basis announced today," the company said in a statement.
The SEC complaint, filed in federal court in Connecticut, alleged that GE met or surpassed analysts' earnings estimates every quarter from 1995 through 2004. A company's shares will often fall if it misses these estimates. LinkHere