Goldman annual meeting brings few fraud queries

Goldman Sachs Group Inc held its longest-ever annual investor meeting on Friday, but Chief Executive Lloyd Blankfein faced few questions about civil fraud charges against the company.

Blankfein, addressing a friendlier audience than the U.S. Senate panel before which he testified on April 27, told well-known shareholder gadfly Evelyn Davis that he was staying in his job after she asked him to resign.

Other queries focused on more typical issues like compensation, global warming, and board appointments.

Blankfein began the 3-hour meeting saying that Goldman would undertake a "rigorous self-examination" after the U.S. Securities and Exchange Commission's charges.

"There is no bigger priority for our board of directors and management than to undertake a comprehensive review of all of our business practices," he told shareholders.

He said Goldman would create a business standards committee that would offer guidance to management regarding standards and transparency.

Friday's meeting at a building in lower Manhattan near Goldman's new headquarters was longer than any other annual shareholder gathering since Goldman went public 11 years ago.

Goldman shares, which have lost 22 percent since the SEC complaint was filed in mid-April, rose 0.47 percent to $142.99 on Friday. They were the top performer in the Amex Securities Broker/Dealer Index.

Addressing Public Concerns

Blankfein mentioned the business standards committee during the Senate hearing. On Friday, he said it was a way for Goldman to address concerns about the company that have been expressed by regulators and the public.

The SEC has accused the bank of failing to tell investors who bought risky debt tied to subprime mortgages that hedge fund manager John Paulson helped select the underlying portfolio for a mortgage-linked security and was shorting the deal. Goldman is also facing related shareholder lawsuits and, according to a source last week, a Justice Department criminal investigation.

The Wall Street Journal reported on Friday that Goldman has begun settlement discussions with the SEC.

For the past year, Goldman has been scrutinized for having accepted government bailout funds and rebounding from the financial crisis so quickly that it was able set aside more than $16 billion last year for bonuses, salaries and other compensation.

At Friday's meeting, former presidential candidate and activist Rev. Jesse Jackson addressed the disconnect between Goldman's out-sized profits and high unemployment and home foreclosures.

Blankfein, who said late last year he was "doing God's work," told Jackson, "There is no future for Goldman, certainly no success for Goldman Sachs, unless the economy as a whole grows, and the economy grows in a way in which it doesn't create a wider divergence.

"If there is a silver lining, it certainly affords us an opportunity to be introspective," Blankfein said.

He acknowledged that the negative attention on the company had put a "strain" on clients.

He has engaged in a public relations campaign, including media interviews, and said he would do more to help the public understand what Goldman does.

"We have very little contact with the consuming public or the retail investor," Blankfein told the shareholders.

Staying Put

There has been speculation that Blankfein would resign.

On Friday, Evelyn Davis kicked off a question and answer session by calling for Blankfein's voluntary resignation by Monday.

"I have no current plan to step down on Monday," answered Blankfein, cracking a smile.

Davis persisted, later asking Blankfein, "If you won't resign by Monday, how about by the end of the month?"

Blankfein retorted, "I have no intention of doing that right now."

Harry Korba, a shareholder from Yonkers, New York, was applauded for expressing support for Blankfein.

Shareholders backed Goldman's nominations for directors and a proposal for an advisory vote on pay. They defeated a proposal by The Maryknoll Sisters of St. Dominic relating to the use of collateral in derivatives trading.

Shareholders also followed the lead of Goldman's board in defeating a proposal urging the company to separate the roles of chairman and chief executive.

[Source: By Steve Eder and Maria Aspan, Reuters, New York, 07May10]

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