Goldman Currency-Trading Definition Shows Disclosure Gap
By Michael J. Moore - Nov 26, 2013 12:00 AM ET
What’s the difference between trading currency products and currency trading? More than $1 billion, according to Goldman Sachs Group Inc. (GS)
The investment bank said last week that it didn’t have a third-quarter loss in currency trading. That followed a report by Reuters on Goldman Sachs’s Nov. 7 Securities and Exchange Commission filing, which shows a $1.32 billion loss from market-making in currency products.
The disconnect stems from the fact that the biggest U.S. banks don’t provide a revenue breakdown for units that make up their equity- and fixed-income trading divisions, which reap more than $70 billion a year. An SEC requirement that banks give some specifics on those businesses resulted in disclosures that firms such as Goldman Sachs, which gets more than half its revenue from trading, said lack meaningful context.
“If you’re trying to figure out the profitability of different lines of business, I don’t know how you effectively do that,” said Edward Siedle, a former SEC attorney and president of Ocean Ridge, Florida-based Benchmark Financial Services Inc. “The commission needs to be careful not to require a disclosure scheme that is just as likely to be misleading as it is to be revealing,”
John Nester, an SEC spokesman, and Michael DuVally at New York-based Goldman Sachs declined to comment about whether the disclosures could change.
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