Goldman lowers legal loss estimate by $700 million

Goldman Sachs Group Inc has reduced its estimate for future legal costs by USD 700 million but said it expects such expenses to "remain high" for the foreseeable future.

The US investment bank, in a regulatory filing on Tuesday, forecast USD 2 billion in "reasonably possible losses" related to a slew of litigation it faces, down from an estimate of USD 2.7 billion three months ago.

Goldman and some its employees are the target of several government investigations and private lawsuits in the United States and abroad, many stemming from actions the bank took leading up to the financial crisis.

Other disclosures in the filing included Goldman's being targeted by a European Commission probe into price fixing for power cables, and a criminal complaint in South Korea filed against current and former Goldman employees involved in the sale of a mortgage-backed derivative product to Heungkuk Fire & Marine Insurance Co in 2007.

Goldman also updated the status of a variety of other legal proceedings, from its sale and marketing of auction-rate securities to a class-action gender discrimination lawsuit filed by three former female employees.

Goldman has already settled some lawsuits, including a USD 10 million settlement with Massachusetts state regulators over the bank's research distribution practices.

"Given the range of litigation and investigations presently under way, our litigation expenses can be expected to remain high," Goldman said in its 10-Q filing with the Securities and Exchange Commission.

Separately, the bank said it was unable to predict the ultimate impact of the Standard & Poor's downgrade of the US long-term credit rating but said "it might be material and adverse" to the financial market.

The bank also said it experienced trading losses on 15 days during the second quarter, compared with eight days and two days, respectively, for rivals Morgan Stanley and JPMorgan Chase & Co.

On 25 of 63 trading days, Goldman's trading results stayed in a narrow range of USD 25 million above or below zero. It lost more than USD 100 million on just one day and brought in USD 100 million in revenue on just four days.