- Associated Press - Tuesday, January 11, 2011

NEW YORK (AP) — Goldman Sachs Group Inc. is promising to be more transparent about how it does business following widespread criticism that it put its own interests ahead of its clients.

In an internal report released Tuesday, Goldman said it would begin disclosing more information about how it makes money and ensure that its business practices put the interests of its clients first.

The 63-page report is the result of an eight-month review of the firm’s practices. It comes after Goldman paid $550 million in July to settle a lawsuit filed by the Securities and Exchange Commission that accused the giant securities firm of creating and selling an investment that was designed to fail.

“Our approach must be: not just ‘can we’ undertake a given business activity, but ‘should we,’ ” the authors of the report wrote in an introduction.

In a video released along with the report, CEO Lloyd Blankfein said Goldman has been subject to “considerable scrutiny” in the aftermath of the financial crisis. He said the review was an “opportunity to engage in thorough self-assessment and consider how we can and should improve.”

The firm set up a committee in May to review all its major businesses, in particular its relationship with clients and conflicts of interest. Goldman’s reputation took a beating during Congressional hearings and questions that were raised after the SEC’s lawsuit. The SEC declined to comment on Goldman’s report.

The SEC accused Goldman of selling an investment created by hedge fund manager John Paulson that contained bad securities. Goldman and Mr. Paulson made money from the investment, while many of Goldman’s clients who invested in the deal lost more than $1 billion.

Recognizing its clients’ distrust after the SEC lawsuit, Goldman said it will work toward reducing the firm’s exposure to potential conflicts of interest and inform clients of the firm’s role in any transaction.

Goldman will start disclosing more information about its revenues beginning with its fourth-quarter results, which come out next Wednesday.