Ford Motor Co., National Semiconductor Corp. and Macy’s Inc. are among companies planning to maintain relationships with Goldman Sachs Group Inc. after the U.S. Securities and Exchange Commission charged the firm with fraud.
“We have had a long relationship with Goldman Sachs and expect it to continue,” said Ford spokesman Mark Truby, declining to comment further. Goldman Sachs took Ford public in 1956 and John Thornton, a former Goldman Sachs executive, sits on Ford’s board.
The SEC accused the New-York based firm on April 16 of creating and selling collateralized debt obligations tied to subprime mortgages in 2007 without disclosing that hedge fund Paulson & Co. helped choose the underlying securities. It also didn’t say that Paulson bet against the securities, the SEC said.
“We have spent an enormous amount of time talking to our clients,” David Viniar, Goldman Sachs’s chief financial officer, told reporters on a conference call today. “We found that largely our clients are supportive of us and the most important thing is to perform.”
Rite Aid Corp., based in Camp Hill, Pennsylvania, also doesn’t plan to amend its relationship with Goldman Sachs, spokeswoman Karen Rugen said in an e-mail. Goldman Sachs is a participant in the company’s senior credit facility, she said.
‘Business as Usual’
“Everything’s business as usual with Goldman,” said LuAnn Jenkins, a spokeswoman for National Semiconductor, based in Santa Clara, California. She declined to comment on past and future relationships with Goldman Sachs.
Macy’s is happy with the advisory services Goldman provides the Cincinnati-based department-store chain and doesn’t plan any changes, Jim Sluzewski, a spokesman for Macy’s Inc., said in an e-mail.
“The argument that Goldman takes positions in opposition to its clients has always been there, yet people continue to do business with Goldman Sachs,” said Richard Bove, an analyst at Rochdale Securities in Lutz, Florida, in an interview today with Bloomberg Television. “The reason is they aren’t playing the clients, they are benefiting the clients. There is no firm that can step in and replace them.” Bove recommends buying shares of Goldman Sachs.
U.S. companies were joined today by the U.K. government, which said that it would keep employing the company two days after Prime Minister Gordon Brown decried the “moral bankruptcy” evident in the SEC’s suit against Goldman Sachs.
“I don’t think you can stop doing business with a firm because an individual is accused of doing something,” Chancellor of the Exchequer Alistair Darling said today.
The U.K.’s Financial Services Authority said in a statement today that it will begin a formal probe into Goldman Sachs.
Goldman Sachs, the most profitable securities firm in Wall Street history, said first-quarter earnings jumped 91 percent to $3.46 billion, or $5.59 a share, surpassing analysts’ estimates.
Goldman’s stock, which dropped 13 percent on April 16 after the SEC filed its case, fell $3.34, or 2.1 percent, to $159.98 at 4 p.m. in New York Stock Exchange composite trading.