Goldman Sachs adds JPMorgan Chase & Co. to conviction buy list

NEW YORK, Tue Jun 26, 2012 – Goldman Sachs added JPMorgan Chase & Co. to its America’s conviction buy list, saying the U.S. bank’s capital position and earnings power can offset its recent hedging loss of at least $2 billion.

Goldman downgraded Morgan Stanley to “neutral” from “buy,” and removed the stock from its conviction buy list, saying earnings could be hurt by muted capital markets activity.

While Goldman sees value in Morgan Stanley’s shares at current depressed levels, it expects better returns at JPMorgan.

The 15 percent decline in JPMorgan share price since the largest U.S. lender by assets announced trading losses at its chief investment office has been “drastic,” given the unit’s 5 percent average earnings per share contribution, Goldman said.

JPMorgan, which has temporarily halted its $15 billion share repurchase program, may also resume buybacks this year, lending further support to the stock, Goldman analysts said.

Goldman, however, cut its second-quarter earnings estimates for JPMorgan to 60 cents from 75 cents to reflect a quicker recognition of its trading losses.

The brokerage cut its price target on Morgan Stanley to $16 from $20.

In the long-term, Goldman said JP Morgan and Morgan Stanley offer meaningful return on equity.

Shares of JPMorgan closed at $35.32, while Morgan Stanley closed at $13.48 Monday on the New York Stock Exchange.

Goldman’s Blankfein: No plans to relinquish duties

CHICAGO,| Wed Jun 13, 2012 – The chief executive and chairman of Goldman Sachs Group Inc. said on Wednesday he has no plans to relinquish his duties running the bank.

Speaking to reporters after a breakfast appearance in Chicago, Lloyd Blankfein quipped: “I’m 57. What am I going to do with the other 60 years of my life?”

Blankfein, who has become a post-bailout lightning rod for critics of Wall Street, said five of his six predecessors left Goldman to accept jobs with the U.S. government, and six died while still heading the firm.

Given his unpopularity on Main Street, Blankfein said, “I’d say the government probably isn’t going to call me … so that leaves staying forever and dying at my desk.”

Blankfein added that leaving the job would be difficult because when it is going well “it’s the best job in the world and you wouldn’t want to leave.”

When it’s going poorly, “You can’t leave because your sense of responsibility won’t let you,” he added.

Two jurors drop out of Gupta insider-trading trial

NEW YORK, Tue May 29, 2012 – Two jurors have dropped out of the insider-trading trial of former Goldman Sachs Group Inc. board member Rajat Gupta, who is charged with giving corporate secrets to imprisoned hedge fund manager Raj Rajaratnam.

Both were excused from the 12-person jury in Manhattan federal court because of family emergencies. The place of Juror No. 12, a professor of strategic design and behavior, was taken on Thursday by one of four alternates, a retired librarian. Juror No. 4, an executive assistant at a hospital, was excused on Tuesday and replaced by another alternate, a marketing manager for a publishing firm.

Gupta, 63, a former global head of management consulting firm McKinsey & Co, is the most prominent corporate figure indicted in the U.S. government’s broad crackdown on insider trading in recent years. He is charged with tipping Rajaratnam between March 2007 and January 2009 while he was a director of Goldman Sachs and Procter & Gamble Co.

Gupta has pleaded not guilty and argues that the prosecution’s evidence is circumstantial.

Galleon Group hedge fund founder Rajaratnam, 53, was convicted a year ago on evidence largely based on court-approved wiretaps of his phones. He is appealing the use of wiretaps as he serves an 11-year prison term, the longest handed down for insider trading in the United States.

Gupta’s trial began last week and is expected to run about three weeks. To convict him of insider trading, the jury must be convinced beyond a reasonable doubt that he breached his fiduciary duties and that he did it intentionally and in anticipation of at least some modest benefit in return.

Goldman plans web-based corporate bond trading platform

NEW YORK, Fri May 4, 2012  – Goldman Sachs is set to launch by end-May or even as early as next week a single-dealer electronic corporate and high-yield bond trading platform called GSessions.

The platform will look to cross trades for its customers in scheduled trading sessions through the day and promises to deliver narrower spreads than those available outside the network, according to a spokesman.

Goldman would also back the platform with a guaranteed liquidity amount in order to step in, up to a certain amount, to correct supply demand imbalances.

The web-based platform is expected to inject some transparency into a market which is primarily voice-trading driven.

Similar trading venues are reported to be planned by some of Goldman’s rivals, including BlackRock, Morgan Stanley and UBS.

Goldman Sachs censured, no further penalty on 2011 warrants case

NEW YORK, Fri Apr 27, 2012 – Goldman Sachs on Friday received an official censure, but no further penalty, from the Hong Kong Stock Exchange following the resolution of a case involving a typographical error in the documentation of some warrants it issued in February 2011.

In administering its slap on the wrist to the U.S. investment bank, the exchange said it took into account several mitigating factors including the fact that this was the first such case for Goldman Sachs since it began issuing the products in 2005.

The bank had also maintained dialogue with the exchange after noticing what had been a mistake.

An error in the formula in the documents, which had been prepared by an external agency but reviewed and approved internally by Goldman, meant that the warrants appeared to be worth much more than they were intended to be.

As a result, the bank noticed unusual trading in the warrants which it attributed to increased interest following the Japanese earthquake and tsunami in March last year.

“During the night of 30 March 2011, a member of the GS warrants team was informed by an acquaintance of a market rumor that there was a difference in the formula used in documentation prepared and published by GS in relation to the warrants and the documentation for a similar Nikkei warrant issued by another institution,” the exchange said in the release.

Goldman Sachs profit tops estimates; raises dividend

NEW YORK, Tue Apr 17, 2012 – Goldman Sachs Group Inc reported higher-than-expected quarterly earnings thanks to aggressive cost-cutting and strong investment banking and trading revenues, and the Wall Street bank raised its dividend.

Goldman earned $2.1 billion, or $3.92 per share. In the year-ago period, which was generally stronger for investment banks’ trading and banking activity, it earned $4.38 per share, excluding a one-time cost for buying back preferred stock.

Analysts had expected $3.55 per share, according to Thomson Reuters I/B/E/S.

Goldman said it would raise its quarterly dividend to 46 cents per share from 35 cents.

Goldman shares were down 1 percent in premarket trading.

Revenue was down across most of Goldman’s businesses except for financial advisory and equities client execution.

But bond-market businesses were a bright spot compared to the 2011 fourth quarter, when markets were still reeling from the European debt crisis. Revenue more than doubled in debt underwriting and fixed-income, currency and commodities trading.

“Because client activity remains relatively low in certain areas, especially in parts of Investment Banking, we believe that our mix of businesses gives the firm significant room for revenue growth as economic and market conditions continue to improve,” CEO Lloyd Blankfein said in a statement.

Goldman also made further cuts to staffing and expenses in what is expected to be the final stretch of an aggressive cost-cutting program that began during the second half of 2011.

The bank set aside $4.4 billion for compensation and benefits during the first quarter, down 16 percent from a year earlier. It also reduced its workforce by 900 employees, or 3 percent.

Goldman to pay $22 million to settle SEC, FINRA charges

WASHINGTON, Thu Apr 12, 2012 – Securities regulators said on Thursday that Goldman Sachs Group Inc. will pay $22 million to settle civil charges that the investment bank lacked adequate policies to prevent firm analysts from sharing non-public information that could be passed to clients.

The joint settlement with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority was previously reported by Reuters on Wednesday.

The case stems from a practice at Goldman that came to light several years ago known as “huddles,” where stock research analysts met with the firm’s traders to share their best trading ideas. Those ideas were then passed along to preferred clients.

Ex-Goldman director Gupta loses wiretap ruling

NEW YORK, Tue Mar 27, 2012 – Former Goldman Sachs Group Inc. director Rajat Gupta lost his bid to suppress wiretap evidence from his upcoming criminal insider-trading trial on charges that he leaked boardroom secrets to hedge fund founder Raj Rajaratnam.

U.S. District Judge Jed Rakoff in Manhattan issued his ruling on Tuesday ahead of Gupta’s scheduled May 21 trial.

Gupta, a one-time global head of the McKinsey & Co. consultancy, is the most prominent corporate executive charged in the U.S. government’s investigation of illicit trading on Wall Street.

The wiretaps include the same ones admitted by U.S. District Judge Richard Holwell at Rajaratnam’s insider-trading trial. Rajaratnam, founder of the Galleon Group, was convicted last May and is serving an 11-year prison term.

Rakoff ruled that the government could use the recordings at Gupta’s trial, saying that “insider trading cannot often be detected, let along successfully prosecuted, without the aid of wiretaps.”

But Gupta also won a victory as Rakoff directed the U.S. Securities and Exchange Commission, which has a separate civil case against Gupta, to turn over some materials to prosecutors. The prosecution must then turn over evidence to the defense that may help Gupta show his innocence.

Rakoff said Gupta had demonstrated a “substantial need” for such evidence that overcomes any need for the SEC to keep the materials private.

Gary Naftalis, a lawyer for Gupta, declined to comment.

Goldman Sachs CEO details hiring plans in Salt Lake City

NEW YORK – Goldman Sachs Group Inc. plans to add 300 workers to its fast-growing office in Salt Lake City, Utah, by the end of the year, Chief Executive Lloyd Blankfein told employees at a town hall meeting there on Tuesday, according to a Goldman staffer who was present.

The increase would bring Goldman’s workforce in the city to 1,600, the attendee cited Blankfein as saying. The person spoke on condition of anonymity because he was not authorized to speak to the press.

Blankfein, 57, was in Salt Lake City to meet with Mayor Ralph Becker and Utah Governor Gary Herbert, and also to make his first visit to Goldman’s downtown office.

Goldman spokesman David Wells confirmed Blankfein’s visit but could not immediately verify the figures.

Goldman first opened a Utah office in 2000, but has been expanding there rapidly since entering a tax break deal with the state in 2009.

Goldman will receive an estimated $47.3 million from Utah over a 20-year period in the form of a 30 percent tax rebate, according to Governor’s Office of Economic Development.

In exchange, the bank agreed to maintain at least 1,065 employees in Salt Lake City and pay them at least 150 percent of the average local county salary.

Goldman to face mortgage debt class-action lawsuit

NEW YORK – Goldman Sachs Group Inc was ordered by a federal judge to face a securities class-action lawsuit accusing it of defrauding investors about a 2006 offering of securities backed by risky mortgage loans from a now-defunct lender.

U.S. District Judge Harold Baer in Manhattan certified a class-action lawsuit by investors led by the Public Employees’ Retirement System of Mississippi.

These investors claimed they lost money in the GSAMP Trust 2006-S2, a $698 million offering of certificates backed by second-lien home loans made by New Century Financial Corp, a California subprime mortgage specialist that went bankrupt in 2007.

Thursday’s decision is a setback for Goldman, which had sought to force investors to bring their cases individually.

Class certification lets investors pool resources, which can cut costs, and can lead to larger recoveries than if investors are forced to sue individually.

Goldman spokesman Michael Duvally declined to comment.

The bank is one of many accused by Congress, regulators and others of having fueled the nation’s housing crisis and 2008 financial crisis in part by having misled investors about the quality of mortgage debt they sold.

Goldman in 2010 agreed to pay $550 million to settle U.S. Securities and Exchange Commission fraud charges over a collateralized debt obligation it sold, Abacus 2007-AC1 CDO.