Goldman Raises 'Reasonably Possible' Legal Losses To $2.6 Billion In 3Q

Goldman Sachs Group Inc. (GS) raised its estimated "reasonably possible" legal losses stemming from various lawsuits and investigations to be $2.6 billion as of the end of the third quarter, up from $2 billion at the end of June, according to its quarterly regulatory filing.

In the third-quarter filing Wednesday, Goldman said its aggregate notional amount of mortgage-related securities sold to parties that have sued for their money back is $15.8 billion. The firm has disclosed numerous lawsuits alleging fraud related to mortgage securities it packaged and sold during the financial crisis, including actions brought by including the Federal Housing Finance Agency (as conservator for Fannie Mae and Freddie Mac), the National Credit Union Administration, Basis Yield Alpha Fund, the Federal Home Loan Banks of Seattle, Chicago, Indianapolis and Boston, the Charles Schwab Corp. (SCHW), Cambridge Place Investment Management Inc., Heungkuk Life Insurance Co. Limited, Landesbank Baden-Wurttemberg, affiliates of Allstate, and others.

Goldman also said in the filing it is subject to investigations and reviews by various unnamed government and regulatory groups over its investment management services, and that it faces civil suits and arbitration proceedings involving disputes with clients related to losses allegedly incurred because of these services. It said it is cooperating with the investigations and reviews.

The firm reported 21 days during which its trading resulted in losses, including eight days where trading revenues were reported to be between zero to losses of $25 million and another eight days were losses ranged from $25 million to $50 million. Goldman said its losses exceeded its daily value-at-risk parameters on one day during the third quarter. It also reported nine days when trading gains exceeded $100 million.

-By Liz Moyer, Dow Jones Newswires; Liz.Moyer@dowjones.com

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