Goldman earnings take a tumble

Goldman Sachs' profit tumbled 82% in the latest quarter, the company said Tuesday, driven in part by last week's settlement of fraud charges with the Securities and Exchange Commission.

Long viewed as Wall Street's top firm, the company also said its second-quarter results were hurt by a tax assessed on its U.K.-based employees by the British government.

But the real driver of the decline was a significant slowdown in its trading business -- revenue declined nearly 40%, amid wild market swings in May and June.

Other parts of the company's business didn't fare well either. Its traditional investment banking business reported a 36% decline in revenue, as overall stock and debt underwriting activity dried up.

Sales activity also declined in Goldman's asset management and securities services business, although to a smaller extent.

"The market environment became more difficult during the second quarter and, as a result, client activity across our businesses declined," company chairman and CEO Lloyd Blankfein said in a statement.

Offsetting those declines was a reduction in the amount of money it set aside this quarter to pay its famously large employee bonuses at year end. During the quarter, it accrued just $3.8 billion, down from $6.6 billion a year earlier.

Overall, Goldman said it earned $613 million, or 78 cents a share, for the quarter, after taking into account the charges it took related to the SEC settlement and the U.K. bonus tax. Just a year earlier, the firm earned $3.44 billion, or $4.93 a share.

Analysts were expecting the company to earn $1.28 billion, or $2.08 per share, according to Thomson Reuters.

Goldman (GS, Fortune 500) shares were roughly unchanged on Tuesday.

The company's latest results came just days after Goldman agreed to pay $550 million to settle the SEC's charges that the firm defrauded investors in a sale of securities tied to subprime mortgages.

Executives at the company however were reluctant to provide many details beyond what was made public as part of last week's announcement.

Speaking with reporters Tuesday, David Viniar, Goldman Sachs' chief financial officer, declined to elaborate on how the two parties reached the settlement figure or whether the company was still legally vulnerable. Some have suspected that Goldman may have pushed for terms in its agreement with the SEC that shielded the firm from any additional mortgage-related suits brought by the agency.

Viniar also remained mum on the fate of Fabrice Tourre, the lone Goldman employee implicated in the government suit. Late Monday, attorneys for Tourre petitioned a federal district court judge to dismiss fraud charges that were brought against him by the SEC.

Goldman executives are also likely to face some tough questions from analysts Tuesday about the impact of forthcoming legislation for Wall Street. President Obama is scheduled to sign the bill into law on Wednesday.

Some analysts have suggested that Goldman could be among the firms hardest hit by changes to derivatives trading and the so-called "Volcker rule," which would limit how much banks can invest in private equity and hedge funds.

Viniar cautioned however it was far too early to begin forecasting the impact of the new bill, noting it would be at least another 15 months before regulators put firm rules in place. There have been questions, for example, about how regulators will define the practice of activities such as "proprietary trading."

"It would really be impossible for us to do now," he said