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For Goldman, Trading Losses on 21 Days in Third Quarter

Susanne Craig|The New York Times
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The Goldman Sachs booth on the floor of the New York Stock Exchange
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It is no secret that Goldman Sachs had a rough third quarter. In a regulatory filing on Wednesday, it disclosed just how rough, reporting trading losses on 21 days in the period.

On one of those down days the firm’s traders lost more than $100 million, but the firm also reported that trading gains exceeded $100 million on nine days, according to the quarterly filing with the Securities and Exchange Commission. In contrast, in the period a year earlier it lost revenue on just two days and earned more than $75 million in trading revenue on 31 separate days.

The third quarter is one Goldman executives would rather forget. Hit by losses in its private equity portfolio and broader economic woes at home and abroad, the firm reported a loss of $428 million. That compares with a $1.7 billion profit in the third quarter of 2010, and it represents only the second quarterly loss for Goldman since it went public in 1999.

In the quarterly filing, the investment bank also disclosed that it reined in its value at risk, a yardstick of how large a loss could be posted in one trading day. Average daily value at risk was $102 million in the quarter, down from $121 million in the period a year earlier and roughly the same as in the second quarter.

Goldman’s filing also gave investors a rundown of the legal matters the firm was juggling and Goldman raised its estimated “reasonably possible” legal losses to $2.6 billion, from $2 billion in the second quarter.

The European debt crisis is foremost in many investors’ minds, and the Goldman filing also provided details about its total short-term exposure to some countries. The company said it had $23.8 billion in exposure to France, $24.4 billion to Germany and $7.6 billion to Ireland. This is not credit risk, but rather the total unhedged loss that Goldman could experience if its holdings were to get stuck in these countries.

When it released its third-quarter results, Goldman said its exposure to troubled European debt, after hedges, was much smaller; just $2.5 billion at the end of the quarter.