Goldman Sachs Earnings Plummet on $5 Billion Settlement

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Goldman Sachs shares plunged on Wednesday, following the release of underwhelming quarterly earnings reports.

The largest investment bank on Wall Street said its 4th quarter earnings dropped by 65% to $765 million, or $1.27 a share, which is down significantly from $2.17 billion, or $4.38 a share, a year earlier.

The steep decline is attributed to the firm’s agreement to pay $5.1 billion in settlement, the largest regulatory penalty in the company’s history. The bank was earlier investigated by U.S. authorities over its handling of mortgage-backed securities.

U.S. regulators have previously penalized three of the biggest U.S. banks, JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. for selling faulty mortgage-backed securities before the financial crisis. Collectively, the aforementioned firms paid $37 billion in penalties.

Goldman Sachs’ 4th quarter revenue reached $7.27 billion, which is a tad higher over earlier estimates of $7.09 billion. The firm’s shares dropped 2% in premarket trade and are down 13% so far this year through Tuesday’s closing price.

Looking at the big picture, Q4 net revenues for 2015 in investment banking topped at $1.55 billion, 7.0% higher from the year before.

Meanwhile, U.S. stock futures opened low on Wednesday with the Dow futures sinking 1.8%, or 288 points. S&P 500 futures dropped 1.82%, or 34 points, while the NASDAQ 100 futures declined 2.04%, or 84 points.

Jacob Maslow is a native New Yorker with  five children. He left his payroll manager position after finding that his true passion was in writing, and has never looked back.

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