What if you made $3.46 billion and no one cared? 
 
 Goldman Sachs Group Inc. found itself in that awkward position Tuesday as it reported the second-highest quarterly profit in the company's 141-year history. The 91% surge was powered by the strongest net revenue ever in Goldman's fixed-income, currency and commodities operation, which makes trades for clients and the firm. 
 
 But reaction to the results was drowned out by questions about the fraud lawsuit filed against Goldman last week by the Securities and Exchange Commission. In a conference call, analysts pressed company executives more than 40 times in a relentless effort to learn more about the controversial financial instrument created for hedge-fund firm Paulson & Co. 
 
 In contrast, there were fewer than 30 questions about the first-quarter results and other nonlegal matters, including the $5.49 billion Goldman set aside for compensation and benefits, up 17% from last year's first quarter. 
 
 Bob O'Brien and Paul Vigna discuss the near-doubling of Goldman's results amid fallout from the S.E.C.'s case against the firm. Also, Aaron Lucchetti discusses the ratings agencies' role in the Abacus deals that went bad. And James Areddy in Shanghai talks about the market's new bull statue. 
 
 Goldman's co-general counsel, Gregory Palm, in his first-ever appearance on a Goldman earnings conference call, repeatedly denied that the firm did anything wrong, using details that show how the company is likely to shape its defense strategy as the lawsuit proceeds through a federal court in New York. 
 
 "We would never intentionally mislead anyone, certainly not our clients or counterparty," Mr. Palm said. "We are very disappointed that the SEC would bring this action, which related to a single synthetic CDO transaction involving two professional institutional investors, in the face of extensive record we believe establishes that the allegations are unfounded." 
 
 Mr. Palm stressed that all three parties to the synthetic collateralized-debt obligation called Abacus 2007-AC1 had a hand in selecting the mortgages they subsequently bet on. Goldman added that it wasn't required to disclose who provided input into the mortgage-selection process for the deal or what views their clients were taking on the portfolio. 
 
 Goldman said on Tuesday that it suffered more than $100 million in losses on the deal, including an $83 million hit from a chunk of the transaction that it wasn't able to sell to investors. Goldman had previously said that its losses were about $90 million. 
 
 Some analysts expressed frustration with Goldman's determination to do whatever it takes to fend off the SEC's accusations. "Why not just work with the SEC?" asked Michael Mayo, an analyst at Calyon Securities. "When you fight City Hall, some bad things happen." 
 
 "It is very early on, and we will see how it unfolds," responded Goldman Chief Financial Officer David Viniar. He said customers, clients and trading partners are standing by the company. "I think you can see from our results last quarter that our clients still support us," he said. 
 
 The lawsuit "is not an immediate concern," said Sid Sczygelski, chief financial officer of Aspirus Inc., a Wausau, Wis., hospital system that raised more than $200 million through refinancings and bond issues handled by Goldman. Still, faced with a new bond issue planned for October 2011, the legal mess at Goldman "is something we are continuing to watch and monitor." 
 
 Patrick O'Meara, president of financial-advisory firm O'Meara, Ferguson, Whelan and Conway, which works with 42 Catholic dioceses in the U.S., said none of them "is currently rethinking their relationships with Goldman Sachs." Mr. O'Meara was at the Vatican on Friday when the suit was filed, triggering a discussion among U.S. church officials. 
 
 "There is a great deal of suspicion with the manner in which the charges were filed and the timing of the charges," he said. 
 
 John Kailunas II, president and chief operating officer of Regal Financial Group, a Kentwood, Mich., investment adviser, said he has received two calls from clients asking "if Goldman was going to be another Enron." 
 
 "If they have clouded their judgment, we will have to use somebody else for advice," added Mr. Kailunas, whose firm relies on Goldman for research and asset management. 
 
 Goldman's earnings jumped to $3.46 billion, or $5.59 a share, from the year-earlier $1.81 billion, or $3.39 a share. Revenue rose 36% to $12.78 billion. Analysts surveyed by Thomson Reuters expected earnings of about $4.01 a share on $11.07 billion in revenue. 
 
 Goldman shares declined 2.1%, or $3.34, to $159.98 in New York Stock Exchange composite trading at 4 p.m. 
 
 Write to Susanne Craig at susanne.craig@wsj.com and Dan Fitzpatrick at dan.fitzpatrick@wsj.com 

 Goldmans boss Lloyd Blankfein thanked clients for their support US bank Goldman Sachs has seen its profit for the first quarter of 2010 nearly double. The bank reported net earnings of $3.46bn (£2.25bn) for the three months to March, up from $1.8bn a year ago. Goldman also revealed that it paid its employees about $5.5bn in compensation, equivalent to 43% of its revenue. Earlier, the UK's Financial Services Authority (FSA) announced a formal enforcement investigation into the bank regarding recent fraud allegations. 'Spectacular figures' The results were ahead of Wall Street expectations, with revenue coming in at $12.8bn, up 36% on the year, and beating forecasts of $11bn. The firm's net earnings were up 92% from a year earlier. BBC business editor Robert Peston described the results as "another spectacular set of figures". 
 
 In light of recent events involving the firm, we appreciate the support of our clients and shareholders 
 
 
 
 Lloyd Blankfein, Goldman Sachs chief executive 
 
 
 
 How US media has reacted Goldman's $5.5bn pay pot is spread across the bank's 33,100 employees, implying an average of $166,000 each. However, the proportion of compensation to revenues was lower than a year ago, when the bank set aside 50% of revenues for remuneration. Like other US investment banks that have already reported, Goldman's revenues were dominated by its debt trading business, accounting for 58% of the broker's total revenues. "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," chief executive Lloyd Blankfein said in a statement. UK inquiry The FSA's earlier announcement followed claims made by the Securities and Exchange Commission (SEC) in the US that Goldman had defrauded investors during the sub-prime housing crisis. The FSA's decision to investigate Goldman... is another embarrassment for the world's most successful hedge fund 
 
 Robert Peston, BBC business editor 
 
 Read Robert's blog On Friday, the SEC issued civil charges against Goldman, alleging that it failed to disclose conflicts of interest during the marketing of sub-prime mortgages in which investors lost $1bn. The SEC said Goldman failed to disclose "vital information" that one of its clients, Paulson & Co, had helped to choose which securities were packaged into the mortgage portfolio. These securities were sold to investors in 2007. Goldman has strongly rejected the SEC's claims as wrong "in fact and law". The FSA has said it will liaise closely with the SEC in its review. Goldman has said it will co-operate with the FSA. It is unusual for the FSA to announce the beginning of a formal investigation. It is understood that the investigation process typically takes months, if not years. Goldman Sachs Group Inc. *Chart shows local time price change % 229.72 - -1.50 - -0.65 The enforcement division of the FSA will now have powers to demand that Goldman provide it with documentation such as records of transactions and records of telephone calls. If the watchdog finds Goldman at fault, it could impose a fine on the bank. Lawsuit 'bandwagon' Bruce Packard, banking analyst at Seymour Pierce, said: "It seems like it is just starting. "I've always been slightly surprised that investors haven't gone after the investment banks in the way they did after the internet bubble." On Sunday, Prime Minister Gordon Brown called for the FSA to launch an inquiry into Goldman Sachs. "Hundreds of millions of pounds have been traded here and it looks as if people were misled about what happened," he said. "I want the Financial Services Authority to investigate it immediately." In addition to the regulatory actions against Goldman, the German government and insurance company AIG have both said they are considering bringing private legal cases over money they lost on sub-prime debt that the firm sold to them. "I expect everybody will jump on the bandwagon now," said Richard Bove, equity analyst at Rochdale Securities, who thinks that the cost to Goldman of defending lawsuits could be enormously expensive over the next few years. Despite this, Goldman seems optimistic about defending these cases, saying it has set aside only $21m of cash to cover the cost of "litigation and regulatory proceedings". In contrast, rival JP Morgan, who is concerned about possible lawsuits over mortgages it sold to the government agencies Freddie Mac and Fannie Mae, said it had provisioned $2.3bn in the first quarter. 'Incredibly arrogant' However, Mr Bove says he doubted that the bad publicity would cause Goldman to lose any customers, because in his view, the Wall Street firm is simply too dominant. "The services it provides in the trading sector are not easy to replicate," he says. "There is no other company that could jump up and take its place." He added that the firm had "done a horrendously bad job over PR. They have come across as incredibly arrogant [but] clients still do business with them." 
 
 
 
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– Goldman Sachs earnings cruised past analysts' estimates to a whopping 91% gain in the first quarter, which might be great news if it didn't come while the bank is mired in fraud allegations. CEO Lloyd Blankfein seemed almost defensive, noting that the performance “reflects more signs of growth across the economy and the strength of our client franchise.” Of the SEC's charges, he would only say, “In light of recent events … we appreciate the support of our clients and shareholders.” In all, the company recorded a $3.46 billion profit, or $5.59 a share, the Wall Street Journal reports, trouncing the $4.01 per share analysts expected. And that profit came after Goldman paid employees $5.5 billion in compensation—or 43% of its total revenue. The announcement comes on the same day the UK's Financial Services Authority launched its own fraud investigation against Goldman, the BBC reports. It said it would work closely with the SEC.