Bloomberg News

Goldman Cuts ‘Reasonably Possible’ Legal-Claim Estimate 7.7%

February 28, 2012

Goldman Sachs Group Inc. (GS), the fifth- biggest U.S. bank by assets, pared its estimate of “reasonably possible” losses from legal claims in the fourth quarter.

The estimate of $2.4 billion as of Dec. 31 was down 7.7 percent from three months earlier, the New York-based firm said today in a quarterly filing with the Securities and Exchange Commission.

Banks started releasing estimates of possible losses after the SEC told corporate finance chiefs in October 2010 that they should disclose such costs “when there is at least a reasonable possibility” that they may be incurred, even if the risk is too low to require reserves.

The estimate doesn’t include potential losses from legal matters that are at an early stage or where the firm can’t determine the potential amount, according to the filing.

Goldman Sachs also said in the filing that SEC staff sent the firm a so-called Wells notice on Feb. 24, indicating the agency may bring a civil claim against the company related to disclosures provided in offering documents for a $1.3 billion sale of subprime mortgage-backed securities in late 2006.

“The firm will be making a submission to, and intends to engage in a dialogue with, the SEC staff seeking to address their concerns,” according to the filing. David Wells, a spokesman for Goldman Sachs, declined to elaborate.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.


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