Goldman Sachs Reports $3.5B Profit Amid SEC's Fraud Charges

April 20, 2010— -- Goldman Sachs today posted hefty profits just as the embattled banking giant is fighting to save its most valuable commodity -- its clients' trust.

Goldman Sachs reported that it raked in $3.46 billion in profits on $12.78 billion in net revenues during the first three months of the year. The $5.59 a share earnings beat expectations by Wall Street analysts, who predicted $4 a share in profit.

It's a number the bank hopes will ease worries among investors, jittery about allegations by the Securities and Exchange Commission that Goldman Sachs knowingly duped investors. Federal regulators Friday charged the investment bank with fraud over the sale of risky subprime mortgage securities that were secretly designed to fail, costing investors $1 billion.

Even though the profit may ease investor worries, experts say it could also incite public anger.

"Their reputation is at stake. Ironically, if there was a day that Goldman Sachs wishes that their results were not so good, it'd probably be today," Suzy Welch, business and economic issues contributor for ABC News, told "Good Morning America's" George Stephanopoulos today. "What makes people mad in the first place is the fact that Goldman makes so much money and perhaps profited off of other people's suffering, and here they are making more money. Could it get more outrageous?"

In a letter to clients Monday, Goldman Sachs called the SEC probe "completely unfounded." The bank's CEO, Lloyd Blankfein, even left a voicemail on employees' phones over the weekend to boost morale.

"This is Lloyd on Sunday in New York. Following my message to you on Friday, I wanted to update all of you and let you know that we have been taking all appropriate steps to defend the firm and its reputation," he said in the voice mail.

The purpose of the voice mails, Goldman Sachs officials told ABC News, was to inform employees about the firm's reaction to the charges and to keep them focused on the task at hand: servicing Goldman's clients. But officials are also trying to boost morale at a crucial time for the bank.

Some are calling for Blankfein to resign amid these fresh allegations, but that's unlikely to happen.

"I don't think it's going to happen in the near term," Welch said. "I think the board is behind him and I think that Goldman would fear that if Lloyd Blankfein went, they would be in a way admitting that something wrong happened there."

Blankfein is set to testify before a Senate panel on April 27, and SEC commissioner Mary L. Schapiro is expected to appear before lawmakers today.

Goldman Sachs has tapped the legal expertise of former White House counsel Greg Craig to fight the domestic charges.

Meanwhile, UK's regulatory agency Financial Services Authority said it will also begin a "formal enforcement investigation" into another alleged fraud scheme by the banking giant that may have cost the Royal Bank of Scotland Group millions of dollars.