Goldman Sachs Group Inc. said Wednesday that its second-quarter results might have attracted some unwanted attention.
The investment bank said in a regulatory filing that the government has started investigations into its pay practices and credit derivatives trading. Goldman said it was cooperating but declined to give further details.
The government inquiries came after Goldman stunned Wall Street last month by reporting the biggest quarterly profit in its 140-year history. And less than a year after it received government Tarp funds, the firm reported it set aside $11.4 billion for employee compensation.
Goldman's dominance of trading floors helped power the $3.44 billion second-quarter profit. In fact, the firm said in the regulatory filing that it made $100 million in trading revenue on a record 46 separate days during the quarter.
Goldman logged trading losses on only two days during the quarter, according to the filing with the Securities and Exchange Commission. On each of the other days, Goldman made at least $50 million by making bigger bets and taking advantage of the market's dislocation. Goldman's credit derivatives business also helped drive second-quarter earnings, and also piqued the interest of government investigators. The firm is a leader in issuing, and trading, derivatives that offer protection against the risk in bonds and other debt.
The Justice Department's antitrust division started its investigation this summer into big banks' dominance of credit-default swaps and other derivatives.