Goldman Sachs posted second-quarter profit on Tuesday that was twice what the bank reported in the period a year earlier. The profit of $1.93 billion, or $3.70 a share, was well ahead of analysts’ expectations of $2.83 a share, according to Thomson Reuters. Revenue rose to $8.6 billion from $6.6 billion in the year-ago period. “The firm’s performance was solid, especially in the context of mixed economic sentiment during the quarter,†Goldman’s chairman and chief executive, Lloyd C. Blankfein, said in a statement. A conference call to discuss the results is being held at 9:30 a.m.
LEGAL FIREPOWER IN TOURRE TRIAL  | The lawyer Sean Coffey was known five years ago as Wall Street’s Public Enemy No. 1, having extracted billions from big banks in the wake of WorldCom’s collapse. Today, his role is reversed. Mr. Coffey is defending a former Goldman Sachs trader, Fabrice Tourre, in a trial that puts a spotlight on a tightknit network of legal players, Ben Protess, Susanne Craig and Michael J. de la Merced report in DealBook. The Securities and Exchange Commission’s civil case against Mr. Tourre went to trial on Monday in a federal courthouse in Lower Manhattan.
DealBook writes: “Mr. Coffey’s co-counsel is Pamela Chepiga, a former federal prosecutor who once played basketball with another diminutive lawyer, Mary Jo White, now the chairwoman of the S.E.C. The defense team is facing off against the head of the S.E.C.’s trial unit, Matthew T. Martens, who typically supervises cases but has never before led a jury trial at the S.E.C. (He is a friend of Mr. Coffey from private practice, though Mr. Martens temporarily unfriended Mr. Coffey on Facebook as a precautionary measure during the trial.) Rounding out the roster, the two sides will argue before Judge Katherine B. Forrest, a longtime corporate lawyer and relative newcomer to the bench who will face her biggest securities trial yet.â€
“The convergence of such prominent lawyers exemplifies the insular world of the securities bar â€" and the revolving door its members often pass through on their way back and forth between government and private practice. It also underscores the importance of a trial in which Mr. Tourre is fighting a possible ban from the securities industry, and the S.E.C. is seeking a defining victory in its uneven campaign to punish those at the center of the crisis.â€
Lawyers on both sides were asked to keep the legal and financial jargon to a minimum. “Mere mortals don’t know what a trading desk is,†the judge said. But as the trial opened, both sides dove into descriptions of residential mortgage-backed securities and credit-default swaps.
WALL STREET’S CULTURE OF GREED  | A new report on Wall Street insiders about ethical conduct, to be released on Tuesday, suggests that big banks’ high-minded words about ethics and integrity may largely be lip service, Andrew Ross Sorkin writes in the DealBook column. Of 250 industry insiders from dozens of financial companies who responded to questions, 23 percent said “they had observed or had firsthand knowledge of wrongdoing in the workplace.†In addition, 24 percent said they would “engage in insider trading to make $10 million if they could get away with it.â€
Mr. Sorkin writes: “As we approach the fifth anniversary of the onset of the financial crisis this September, it appears memories are shorter than ever. If the report is accurate, the insidious culture of greed is back â€" or maybe it never left.â€
ON THE AGENDA Â |Â Johnson & Johnson and Coca-Cola report earnings on Tuesday morning. Yahoo reports earnings after the market closes. The Consumer Price Index for June is out at 8:30 a.m. Data on industrial production in June appears at 9:15 a.m. Mohamed El-Erian, chief executive of Pimco, is on CNBC at 8:30 a.m.
HERBERT ALLISON DIES AT 69 Â |Â
Herbert M. Allison Jr., a former president of Merrill Lynch and chief executive of Fannie Mae who later ran the United States government’s bank bailout program, died on Sunday at his home in Westport, Conn., The New York Times reports. He was 69. His son Andrew said the cause was possibly a heart attack.
“I would say that he was an independent and pragmatic thinker,†Andrew Allison said. “He worked with people from different parts of the political spectrum because he was interested in first and foremost serving the nation and its interests.†Mr. Allison, who served in a number of roles in the private and public sector and as a political appointee under both Presidents Obama and George W. Bush, began his financial services career at Merrill, working his way up during his 28 years there. While at Merrill, he helped coordinate the group of banks that bailed out the hedge fund Long-Term Capital Management in 1998.
T. Rowe Price Reiterates Opposition to Dell Buyout  | A major investor in Dell, T. Rowe Price, said ahead of a shareholder vote on Thursday that it believed “the proposed buyout does not reflect the value of Dell,†Bloomberg News reports. BLOOMBERG NEWS
Baidu to Pay $1.9 Billion for Chinese App Store Operator  | Baidu, China’s largest search engine company, said on Tuesday that it had reached a preliminary deal to acquire 91 Wireless, a leading mobile app developer and app store operator in China. DealBook »
VMware Sells Zimbra Amid Shift in Strategy  | VMware is selling Zimbra, a provider of corporate e-mail and collaboration software, to Telligent, which makes social software for businesses. DealBook »
AT&T’s Defensive Play  | AT&T’s deal for Leap Wireless “may be more of a jab at T-Mobile than a boost to AT&T,†The Wall Street Journal’s Heard on the Street column writes. WALL STREET JOURNAL
Tokyo Exchange Completes Merger With Osaka Rival  |Â
BLOOMBERG NEWS
Barclays Hires a JPMorgan Executive as Its Next C.F.O.  | Tushar Morzaria, the chief financial officer of corporate and investment banking at JPMorgan Chase, will join Barclays in the autumn. DealBook »
R.B.S. Said to Seek Buyer for Education Unit  | The Royal Bank of Scotland “is studying the sale of a unit that manages 11 Australian schools, said a person with knowledge of the matter,†Bloomberg News reports. BLOOMBERG NEWS
Billabong Secures $364 Million in Financing  | After failing to strike a takeover deal with private equity firms last month, the Australian surfing apparel company said on Tuesday that some of those same firms would help it arrange short-term financing to pay down debts and finance its working capital needs. DealBook »
First Data to Suspend 401(k) Contributions  | The credit card processing company First Data, which is owned by the private equity firm K.K.R., plans to suspend 401(k) contributions for employees and replace cash bonuses with stock, The Wall Street Journal reports. The company, which is trying to return to profitability, recently hired the longtime JPMorgan executive Frank Bisignano to be chief executive. WALL STREET JOURNAL
Generali Said to Be Selling Private Equity Fund Stakes to Lexington  | The holdings in the funds were valued at almost 500 million euros ($648 million), Bloomberg News reports. BLOOMBERG NEWS
Hong Kong Brings Civil Case Against Tiger Asia  | The Financial Times reports: “Hong Kong’s market regulator has abandoned the chance to pursue a criminal case against U.S.-based hedge fund Tiger Asia Management by launching formal civil proceedings on market abuse allegations from almost four years ago.†FINANCIAL TIMES
After Pork Deal, Plans for a Hong Kong I.P.O.  | Reuters reports: “China’s Shuanghui International Holdings, which has agreed to buy the U.S. pork producer Smithfield Foods Inc. for $4.7 billion, plans to list the combined company in Hong Kong after completing the takeover, people with knowledge of the matter told Reuters.†REUTERS
Third Point Reinsurance Files for I.P.O.  | Third Point Reinsurance, a reinsurer based in Bermuda that was founded by the hedge fund manager Daniel S. Loeb, has filed to go public. It plans to list its shares on the New York Stock Exchange under the ticker symbol TPRE. DealBook »
Airbnb Said to Shift Strategy Abroad  | The start-up Airbnb, which helps people rent out their rooms, “has recently slowed down hiring in its international operation, according to several people with direct knowledge of the matter,†The Wall Street Journal reports. WALL STREET JOURNAL
China Says Glaxo Used Travel Firms for Bribery  | Authorities in China said they had uncovered a conspiracy involving tens of millions of dollars, directed by senior executives at the British drug giant GlaxoSmithKline, The New York Times reports. NEW YORK TIMES
Insider Traders Should Be Ready to Do Hard Time  | Two recent decisions by appeals courts have upheld the discretion of judges to mete out long sentences for insider trading, even if this was not the common practice in similar cases, Peter J. Henning writes in the White Collar Watch column. DealBook »
Public-Private Partnerships Could Be a Lifeline for Cities  | Municipalities can gain much needed cash and operating efficiency by contracting with private equity investors to run a public service or utility, writes Kent Rowey, a partner at Allen & Overy in New York. The investors make a large upfront payment and receive a concession to operate the service. DealBook »
Looking Past G.D.P. to the Changes in China Ahead  | It is now difficult for even the most bullish of China analysts to argue that the economy is not in very difficult straits, Bill Bishop writes in the China Insider column. DealBook »
Report Finds Flaws in S.E.C.’s Vetting of Contractors  | The Securities and Exchange Commission “failed to properly investigate the possible criminal backgrounds of up to 70 contractors, including one who later assaulted his girlfriend, the agency’s watchdog found in a previously unreleased investigative report,†Reuters reports. REUTERS
Banks Dodge a Bullet With Deal on Swaps  | Global banks will now have the choice of trading and clearing trans-Atlantic swaps in either Europe or the United States, Dominic Elliott and George Hay of Reuters Breakingviews write. REUTERS BREAKINGVIEWS
