On Wall Street, the numbers usually speak for themselves. But for Goldman Sachs, even a blockbuster earnings report on Tuesday failed to shift attention away from the fraud accusations leveled last week by the Securities and Exchange Commission. The firm earned nearly twice as much as it made in the first quarter of 2009, but even so, Goldman Sachs executives were mostly answering questions about the SEC suit rather than the stellar results, which easily surpassed expectations, and the company's stock fell $3.34, to $159.98 a share. Goldman was well prepared for the questions, taking the unusual step of having its general counsel, Gregory Palm, along with its chief financial officer, David Viniar, for the early-morning conference call after the earnings announcement. At times the tone was defensive, with analysts pressing for more specifics about the mortgage securities at the heart of the case, as well as exactly what Goldman had told investors about them. The SEC complaint damaged the reputation of a firm that had come through the subprime debacle relatively unscathed, but which has been criticized recently for its huge profits and aggressive trading. According to the SEC suit, a hedge fund manager, John Paulson, helped ACA Management select mortgage securities in 2007 that he thought had a high likelihood of defaulting, which were then bundled together by Goldman Sachs and sold to investors. When the housing market crumbled, the securities did in fact default, handing Paulson a profit of about $1 billion, while ACA, ABN Amro and IKB, a German bank, ended up on the losing end. Goldman, the suit says, never told investors about Paulson's role. Palm took a more aggressive stance than Viniar, forcefully denying the charges, with both repeatedly stating the firm was dedicated to serving its clients and did not deceive investors. 'We would never intentionally mislead anyone, certainly not our clients or counterparties,' Palm said. 'We certainly had no incentive to design a transaction that was designed to lose money.' He insisted that ACA, not Paulson, was responsible for choosing which mortgage securities would be bundled together by Goldman. 'The portfolio here was not selected by John Paulson,' Palm said. 'The portfolio was selected by ACA.' Viniar also argued that ACA and IKB were sophisticated investors with years of experience in the mortgage arena, signaling what was likely to be an important argument as the public relations battle, as well as the legal one, intensifies. 'There were only two professional investors with extensive experience,' Viniar said. 'As professional investors, each had the resources to analyze the reference securities, which were completely itemized.' ACA, he added, rejected half the securities recommended by Paulson. The suit has rocked Wall Street, and Goldman shares fell nearly 13 percent on Friday when the suit was disclosed. Although questions about the suit took up about two-thirds of the call, both the analysts as well as the two Goldman executives seemed relieved when the conversation shifted to the results. When Guy Moszkowski of Bank of America Merrill Lynch, asked about risk-weighted assets, he opened his question by telling Viniar 'believe it or not, I have a question on the quarter.' Earnings for the Wall Street giant rose 91 percent in the first quarter of 2010, to $3.46 billion or $5.59 a share, up from $1.81 billion or $3.39 a share in the same period last year. Revenue increased 36 percent, to $12.78 billion, up from $9.42 billion in the quarter a year ago. Analysts surveyed by Bloomberg had expected revenue of $11.05 billion and earnings of $4.14 a share. Dushyant Shahrawat, a senior research director for TowerGroup, said the results reflected the depths to which Goldman had fallen during the financial crisis. 'Things had fallen off the cliff so badly that frankly, the only way from there was up,' he said. Goldman should profit from fast-paced growth in overseas markets, Shahrawat said, but it also may face new pressures like financial regulation and questions about its reputation. 'Unless the Dow goes to 14,000 anytime soon, the revenues are not going to blow the barn doors off,' Shahrawat said. In the first quarter, the bank's bond, commodities and currency trading once again bolstered the results. In addition, Goldman said it had set aside 43 percent of revenue in the first quarter for employee salaries and bonuses, down from 50 percent for the period a year ago. Tuesday's quarterly results showed the dominance of the bank's trading operations. Profit in the trading division jumped 43 percent to $10.25 billion in the quarter. Fixed-income trading had revenue of $7.39 billion, a 13 percent increase. Equities trading earned $2.35 billion, an 18 percent increase from the quarter a year ago. In a statement, the chief executive, Lloyd Blankfein, said that the results reflected 'more signs of growth across the economy and the strength of our client franchise.' 'In light of recent events involving the firm, we appreciate the support of our clients and shareholders, and the dedication and commitment of our people,' he said, in a nod to the SEC's case. 