Tuesday, March 1, 2011

Goldman Sachs Says It Lost Money From Trading on 25 Days in 2010

Goldman Sachs Says It Lost Money From Trading on 25 Days in 2010

By Christine Harper

March 1 (Bloomberg) -- Goldman Sachs Group Inc., the fifth- biggest U.S. bank by assets, lost money from trading on 25 days during 2010, up from a record-low 19 days in 2009, according to a regulatory filing.

After incurring losses on trades during 12 days in the first 9 months, the full-year figures indicate that Goldman Sachs lost money on 13 days in the fourth quarter. The firm’s traders also made $100 million or more on 68 days in 2010, down from the record 131 days in 2009, according to the New York- based company’s annual 10-K filing with the Securities and Exchange Commission.

Traders exceeded the firm-wide “value-at-risk” limit, or VaR, on one occasion during 2010 “to facilitate a client transaction,” according to the filing. The risk position was reduced the following day to comply with the limit, which is one of the gauges Goldman Sachs uses to measure potential trading losses. In 2009, the firm-wide VaR was exceeded on two consecutive days, the filing said.

Although the filing doesn’t say when the VaR limit was exceeded, it includes a graph showing a one-day increase in daily value-at-risk early in the fourth quarter to a high of $223 million from a fourth-quarter range of between about $100 million and $140 million. The average value-at-risk for the year was $134 million, down from $218 million in 2009.

Goldman Sachs changed the way it reports trading revenue in the last quarter of 2010, creating a separate category for so- called “investing and lending” activities that were previously included in trading. Under the new reporting system, the firm’s 2010 trading revenue dropped 33 percent from the previous year, while revenue from investing and lending more than doubled.

Under the new reporting system, Goldman Sachs’s 2009 revenue from fixed income, currencies and commodities was cut by $1.4 billion, or 6.1 percent, from the original figures. The equities division’s revenue increased $950 million, or 9.6 percent, under the new method. The company didn’t provide 2010 results under the original reporting system.

To contact the reporters 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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