Goldman Sachs, which is facing fraud charges from US securities regulators, today warned that more litigation and investigations could be coming.
Goldman, in a quarterly regulatory filing, said it faces a number of probes and reviews, which could be damaging to Wall Street's most influential firm.
It said it anticipates additional shareholder actions and other investigations related to its offerings of collateralised debt obligations, which are at the heart of charges against the firm filed by the Securities and Exchange Commission.
Goldman shares have tumbled more than 20 per cent since the SEC accused the bank on April 16th of failing to tell investors who bought risky debt tied to subprime mortgages that hedge fund manager John Paulson helped select the underlying portfolio for the security and was shorting the deal.
Goldman shares, which closed Friday at $142.99, were up 3.5 per cent in premarket trading. Equities looked poised for a rally after tumbling last week.
The firm, in its filing, said the SEC case "could result in collateral consequences to us that may materially adversely affect the manner in which we conduct our businesses." It said certain outcomes could impact the firm's ability to act as broker-dealer or provide certain advisory and other services to US-registered mutual funds.
The Wall Street Journal reported last week that Goldman had begun settlement talks with the SEC.
Some analysts and investors have speculated that scrutiny surrounding Goldman would lead to the resignation of chief executive Lloyd Blankfein. But at the bank's annual shareholder meeting on Friday, Mr Blankfein said he had no plans to resign.
For the past year, Goldman has faced a backlash over its quick rebound from the financial crisis, while benefiting from various government bailout programs, and its bonus pool, which topped $16 billion last year.
The SEC's fraud charges have heightened the public furor against the firm, which has been cast as profiting from the subprime mortgage meltdown.
Goldman, criticised for not disclosing it had received notice last year of the likelihood of SEC charges, discussed several investigations today, including probes by the Financial Industry Regulatory Authority and the UK's Financial Services Authority related to CDO offerings and related matters.
The bank said it is cooperating with a number of investigations and reviews into its sales and trading operations related to corporate and government securities and other financial products.
The firm also said it is facing investigations and reviews relating to the 2008 financial crisis, including the establishment and unwinding of credit default swaps with American International Group. Goldman has been criticised for benefiting from the government rescue of AIG.
Inquiries into the financial crisis are also looking at Goldman's transactions with Bear Stearns and Lehman Brothers.
Goldman also disclosed that it is subject to inquiries related to its transactions with the government of Greece, including financing and swap transactions.
Reuters