NEW YORK, United States – GOLDMAN Sachs Group Inc said yesterday its first-quarter earnings almost doubled to US$3.3 billion as its trading business again surpassed the rest of the financial industry. Company executives, again defending the bank against government civil fraud charges, said Goldman Sachs would “never intentionally mislead anyone.”

Goldman Sachs earned US$5.59 a share on revenue of US$12.78 billion as bond, commodities and currency trading buoyed its profits for yet another quarter. That was well above expectations of analysts surveyed by Thomson Reuters. It was Goldman’s second most profitable quarter since going public in 1999. In the fourth quarter, Goldman Sachs earned a record US$4.79 billion.

Goldman Sachs also reported sharply higher fees from underwriting stock and debt offerings.

The bank’s earnings were overshadowed by the Securities and Exchange Commission’s civil fraud lawsuit filed Friday. The SEC alleges that Goldman Sachs and one of its vice presidents misled investors who bought complex financial products that were expected to fail.

During a conference call with analysts Tuesday, co-general counsel Greg Palm was asked why Goldman Sachs did not disclose to shareholders that it had been served with a Wells notice about the SEC’s investigation of a transaction involving collateralised debt obligations, or CDOs. A Wells notice is a letter describing probable charges against a company and requesting a response.

Palm said the company does not report to shareholders every time it receives a Wells notice. “We just disclose it if we consider it to be material,” he said. Palm said the company has provided the SEC with “an extensive amount of documents and testimony” over the past 18 months relating to the transaction.

The charges against Goldman Sachs took investors by surprise. The company’s stock fell almost 13 per cent on Friday, although it has recovered somewhat since then. In preopening trading, the stock rose more than two per cent, a sign that investors found Palm’s discussion of the case satisfactory.

Palm repeated the company’s statement that it did not know charges were going to be filed against it.

The SEC alleges that Goldman Sachs did not tell two clients that the CDOs they bought were crafted in part by billionaire hedge fund manager John Paulson, who was betting on them to fail.

The two clients, the German bank IKB Deutsche Industriebank AG and the financial consulting firm ACA Management LLC, “were institutions with significant resources and extensive experience in the CDO market,” Palm said.

“We would never intentionally mislead anyone,” Palm said.

Goldman hired ACA Management to select the pools of subprime mortgages it used to create the CDO. However, the SEC alleges that Goldman didn’t tell the buyers that Paulson’s hedge fund, Paulson & Co, also played a role in selecting the mortgage pools and stood to profit from their decline in value.

Palm denied that charge.

“The portfolio here was not selected by John Paulson,” Palm said. “The portfolio was selected by ACA.”

Palm said the bank has had no discussion with the U.S. Justice Department regarding the transaction, suggesting it so far remains a civil complaint, not criminal.

The company told analysts that it lost more than US$100 million on the transaction, up from the US$90 million earlier reported. The higher amount was due in part to fees and other expenses, said David Viniar, Goldman Sachs’ chief financial officer.

In its earnings report, Goldman Sachs said it set aside US$5.5 billion in the first three months of the year to pay employee salaries and bonuses, up 17 per cent from last year. However, the bank said the percentage of revenue set aside for compensation in the quarter fell from 50 per cent to 43 per cent year-over-year.

Banks’ high levels of compensation, including bonuses, have come under heavy criticism since the financial crisis that began in 2008. Lawmakers and the public have complained that the banks were rewarding the same employees whose risky trading practices helped plunge the country into recession. Goldman Sachs, because of its great success in trading, has come under particular sharp criticism.

The bank’s stock rose 1.7 per cent in pre-opening trading.

Goldman’s trading of risky assets once again generated the bulk of its profits. Revenue from trading of bonds, currencies and commodities rose 13 per cent in the quarter to US$7.39 billion.

Investment banking revenue, considered the foundation of the company’s business, rose to US$1.18 billion, up 44 per cent from last year. Investment banking includes advising on corporate deals and raising capital for stock and bond issues.

Goldman Sachs, which has outperformed other financial companies for years, has been the strongest bank throughout the financial crisis. It had less exposure to toxic mortgage-related securities than other companies and also has been more aggressive in its trading.

Goldman Sachs also said yesterday that the executive at the centre of the civil fraud case is voluntarily taking some time off from work.

Fabrice Tourre, who was named in the SEC lawsuit against the firm, is taking a break from his position at the firm’s London offices, Goldman Sachs spokesman Michael Duvally said.

“It is voluntary. He decided to take some time off,” Duvally said.