High profile firm will now report its, clients trading separately
By Brett Philbin and Liz Moyer
NEW YORK (MarketWatch) — one of several changes the firm will make to its quarterly reports following an eight month review of its business practices.
In a filing with the Securities and Exchange Commission, the investment bank (GS 170.12, +0.36, +0.21%) revealed new segments and adjustments to its business lines and reported prior results beginning in 2008 on a comparable basis. With the new structure, trading and principal investments is now divided into institutional client services and investing and lending.
Dividing the trading from other activities results in different percentage contributions from the firm’s powerful trading desks to net revenues. Fixed income, commodities and currencies trading, for example, contributed 42% to net revenues in the third quarter ended in September. But under the new format, they contribute just 30%.
Equity trading, including commissions, made up 20% of revenues in the third quarter, but under the new reporting method, contributes 22%. Net revenues stayed the same, at $8.9 billion.
Trading was 63% of net revenues in the third quarter. That percentage drops to 52% under the new reporting method. Trading contributions to net revenues appear lower because some of the trading results have been shuffled into a new category called investing and lending, which contribute 20% of net revenues under the new reporting
In the 63-page report from Goldman’s Business Standards Committee, Wall Street’s most profitable investment bank said the review included interviews with more than 200 of the firm’s clients.
Goldman’s report followed a $550 million settlement with the SEC to settle civil charges that it duped clients by selling mortgage securities that were secretly designed by a hedge-fund firm to cash in on the housing market’s collapse. Goldman settled the civil fraud complaint in July without admitting or denying the charges.
Shares of Goldman Sachs recently traded up 0.29% at $170.26.
