Wall Street giant Goldman Sachs Group, Inc. Tuesday reported stronger than expected results for its first quarter, ended March 31. At the same time, its regulatory troubles grew.

Following the news that the U.S. Securities and Exchange Commission brought securities fraud allegations against the firm last week (which the firm denies, and have not been proven), the UK’s Financial Services Authority said Tuesday that “following preliminary investigations” it has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to the SEC’s allegations. ‬‪The FSA will be liaising closely with the SEC in this review, it said.‬‪

The news comes as Goldman reported first quarter net revenues of US$12.78 billion, and net earnings of US$3.46 billion.

Trading and principal investments accounted for the bulk of the firm’s net revenues, as they were US$10.25 billion for the quarter, 43% higher than the first quarter of 2009 and 60% higher than the fourth quarter of 2009. On the fixed income side net revenues were US$7.39 billion, 13% higher than the first quarter of 2009. “These results reflected strong performances in credit products, mortgages and currencies, which were each significantly higher compared with the first quarter of 2009,” it said.

Net revenues in equities were US$2.35 billion, 18% higher than the first quarter of 2009. “These results reflected strong net revenues in derivatives, which were significantly higher than the first quarter of 2009. In addition, results in principal strategies were positive compared with losses in the first quarter of 2009,” the firm said.

In the investment banking business, net revenues were US$1.18 billion, 44% higher than the first quarter of 2009 and 28% lower than the fourth quarter of 2009. Financial advisory revenues were 12% lower than the first quarter of 2009, reflecting a decline in industry-wide completed mergers and acquisitions, it said. Whereas revenues in the firm’s underwriting business were US$720 million, more than double the amount in the first quarter of 2009.

The asset management and securities services business saw revenues of US$1.34 billion, 8% lower than the first quarter of 2009 and 14% lower than the fourth quarter of 2009.

“Our performance in the first quarter reflects more signs of growth across the economy and the strength of our client franchise,” said Lloyd Blankfein, chairman and CEO. “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.”

IE