Will Goldman Sachs Group Inc. (NYSE: GS) Pay $1 Billion to Settle its SEC Suit?

Will Goldman Sachs Group Inc. (NYSE: GS) Pay $1 Billion to Settle its SEC Suit?

Goldman Sachs Group Inc. (NYSE: GS) was recently charged by the Securities and Exchange Commission for defrauding investors and new media reports suggest that the company may have to pay a fine as large as $250 million, pay $371 million to investors related to the suit and accept a lesser charge to make the suit go away.

Other analysts have predicted a much higher settlement number, potentially topping a $1 billion total cost for the Wall Street firm.

Sanford C. Bernstein & Co. analyst Brad Hintz estimated last Thursday that Goldman Sachs might have to pay as much as $621 million to reach a settlement with the SEC. The analysts said that he believes the SEC will accept a $250 million fine based on previous settlements that the U.S. government has made with Wall Street. Hintz also believes that Goldman Sachs Group Inc. (NYSE: GS) would also have to pay $371 million to investors that had money in the securities which are at the heart of the SEC’s suit.

Hintz said he believed that the payment to settle the suit could cut the company’s earnings by as much as $1.05 per share, a number which would be “painful to Goldman” but “allow both Goldman Sachs and the SEC to walk away declaring victory.”

The consensus estimate is that Goldman Sachs Group Inc. (NYSE: GS) will post earnings per share of $19.53 for 2010, according to Reuters.

“Certainly, Goldman wants this case settled,” Mr. Hintz wrote.