Goldman Said to Pay $5.4 Billion in Compensation

Talk about bad timing.

Amid accusations that it defrauded investors, Goldman Sachs is set to pay more than £3.5 billion ($5.4 billion) in compensation to its staff for the first three months of the year, The Times of London reported.

The newspaper said:

The bumper payouts will equate to about £110,000 a head for the firm’s 32,500 employees worldwide, with a handful of top traders expected to be in line for multimillion-pound bonuses.

Close to £600 million is expected to be paid to the group’s 5,500 London-based staff for the first three months of this year. This is on a par with their remuneration in 2007, the last year of the boom.

The report comes after a civil lawsuit filed against Goldman last Friday contained damaging allegations whose reverberations are just beginning to be felt. In the lawsuit, the Securities and Exchange Commission contends that Goldman misled investors who bought a mortgage-related instrument known as Abacus 2007-AC1 by not disclosing that the security was devised to fail.

Goldman has denied the allegations and says it will fight them.

The allegations have led to calls for increased scrutiny of the bank from lawmakers in the United States and Europe. Prime Minister Gordon Brown of Britain accused the firm of “moral bankruptcy.” He said that British regulators should investigate, and that he believed banks themselves would be considering legal action, without specifying which banks.

The recent public outcry against Wall Street banks following taxpayer of bailouts was driven in part by suspicions that a heads-we-win, tails-you-lose ethos pervades the financial industry. To many, that Goldman and others are once again minting money — and paying big bonuses to their employees — is evidence that Wall Street got a sweet deal at taxpayers’ expense. The accusations against Goldman may only further those suspicions.