Goldman Sachs (GS) Said It Didn't "Bet Against" Clients In Meltdown
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Price: $1,004.42 --0%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 2.1%
Revenue Growth %: +16.2%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 2.1%
Revenue Growth %: +16.2%
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In a letter to the firm's shareholders on Wednesday, Goldman Sachs Group Inc. (NYSE: GS) said that it did not bet against its own clients during the financial meltdown, and dismissed the claims that it used the turmoil to make a profit.
The firm said that it did not make enormous profit or net revenue by betting against residential mortgage-related securities.
"As a market maker, we execute a variety of transactions with clients and other market participants... which may result in long or short risk exposures to thousands of different instruments at any given time," the annual letter to shareholders from Goldman stated.
The company did acknowledge in the letter that it was able to temper the losses it would have endured had it not decided to reduce its exposure to the risky mortgage backed securities before the residential housing market began to deteriorate at a rapid pace.
Goldman Chairman and CEO Lloyd Blankfein and President Gary Cohn added in the letter to shareholders that the firm places its clients and their interests atop of the pecking order.
"The firm's focus on staying close to our clients and helping them to navigate uncertainty and achieve their objectives is largely responsible for what proved to be a year of resiliency across our businesses, and by extension, a strong performance for Goldman Sachs," the letter stated. "Our goal was, and is, to be in a position to make markets for our clients while managing our risk within prescribed limits."
Goldman also commented on the controversy surrounding its relationship with AIG (NYSE: AIG). The firm reiterated that while its direct economic exposure to AIG was minimal, due to collateral and market hedges, the failure of AIG would have been "extremely disrupted to the world's already turbulent financial markets."
Goldman Sachs has seen its shares double in the last year, and the stock’s price is down slightly by 15 cents in premarket movement on Wednesday to $172.75.
Link to Goldman Sachs 2009 Annual Report
The firm said that it did not make enormous profit or net revenue by betting against residential mortgage-related securities.
"As a market maker, we execute a variety of transactions with clients and other market participants... which may result in long or short risk exposures to thousands of different instruments at any given time," the annual letter to shareholders from Goldman stated.
The company did acknowledge in the letter that it was able to temper the losses it would have endured had it not decided to reduce its exposure to the risky mortgage backed securities before the residential housing market began to deteriorate at a rapid pace.
Goldman Chairman and CEO Lloyd Blankfein and President Gary Cohn added in the letter to shareholders that the firm places its clients and their interests atop of the pecking order.
"The firm's focus on staying close to our clients and helping them to navigate uncertainty and achieve their objectives is largely responsible for what proved to be a year of resiliency across our businesses, and by extension, a strong performance for Goldman Sachs," the letter stated. "Our goal was, and is, to be in a position to make markets for our clients while managing our risk within prescribed limits."
Goldman also commented on the controversy surrounding its relationship with AIG (NYSE: AIG). The firm reiterated that while its direct economic exposure to AIG was minimal, due to collateral and market hedges, the failure of AIG would have been "extremely disrupted to the world's already turbulent financial markets."
Goldman Sachs has seen its shares double in the last year, and the stock’s price is down slightly by 15 cents in premarket movement on Wednesday to $172.75.
Link to Goldman Sachs 2009 Annual Report
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