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Amid the legal storm building over allegations of securities fraud in the
subprime mortgage space, Goldman Sachs said Tuesday
that its first quarter business dealings turned a hefty
profit, more than doubling its numbers from a year ago and coming out far
ahead of analysts' expectations.

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The company reported net earnings of $3.46 billion for the first three
months of this year, or $5.59 per share. Analysts surveyed by Bloomberg had
forecast $4.14 a share. The Q1 numbers compare to net earnings of $1.66
billion, or $3.39 a share, for the same period last year. Net revenues rose
to $12.78 billion, from $9.43 billion a year earlier.

"Our performance in the first quarter reflects more signs of growth across
the economy and the strength of our client franchise," said CEO Lloyd C.
Blankfein. "While we are encouraged by growth prospects for the economy, we
continue to put a premium on strong capital and liquidity levels, and
disciplined risk management."

Goldman Sachs' results got their biggest boost from the company's trading
and principal investments business, which produced net revenue of $10.25
billion, 43 percent higher than the first quarter of 2009 and 60 percent
higher than the fourth quarter of last year.

As DSNews.com previously reported
, Goldman Sachs was hit with a civil
lawsuit on Friday, in which the SEC accused the firm of cheating investors
in a collateralized debt obligation (CDO) backed by subprime mortgages. The
suit claims Sachs misrepresented the expected performance of the security to
its clients, who lost $1 billion on the deal, while the investment bank and
a fellow hedge fund themselves were betting on the mortgages to default.

Reports today reveal that the SEC's decision to sue the Wall Street fixture
was split down party lines in a 3-2 vote. According to Reuters, SEC Chairman
Mary Schapiro sided with the two Democratic commissioners, Luis Aguilar and
Elisse Walter, in deciding to pursue civil fraud charges. The two Republican
commissioners, Troy Paredes and Kathleen Casey, dissented.

The partisanship reflected in the agency's assessment may be further
evidence of the political motivation surrounding the charges, which have
helped fuel Washington
's push for stronger financial regulatory
reform.

Blankfein referenced the SEC charges only briefly in the earnings release.
"In light of recent events involving the firm, we appreciate the support of
our clients and shareholders, and the dedication and commitment of our
people," he said.

But Goldman Sachs is already putting together a strong defense with its deep
pockets. The Wall Street firm said in a statement released Friday, "We are
disappointed that the SEC would bring this action related to a single
transaction in the face of an extensive record which establishes that the
accusations are unfounded in law and fact."

The company added, "Goldman Sachs, itself, lost more than $90 million. Our
fee was $15 million. We were subject to losses and we did not structure a
portfolio that was designed to lose money."

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