Goldman Sachs 2015 Annual Report Download - page 210

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 27.
Legal Proceedings
The firm is involved in a number of judicial, regulatory and
arbitration proceedings (including those described below)
concerning matters arising in connection with the conduct
of the firm’s businesses. Many of these proceedings are in
early stages, and many of these cases seek an indeterminate
amount of damages.
Under ASC 450, an event is “reasonably possible” if “the
chance of the future event or events occurring is more than
remote but less than likely” and an event is “remote” if “the
chance of the future event or events occurring is slight.”
Thus, references to the upper end of the range of reasonably
possible loss for cases in which the firm is able to estimate a
range of reasonably possible loss mean the upper end of the
range of loss for cases for which the firm believes the risk of
loss is more than slight.
With respect to matters described below for which
management has been able to estimate a range of
reasonably possible loss where (i) actual or potential
plaintiffs have claimed an amount of money damages,
(ii) the firm is being, or threatened to be, sued by purchasers
in an underwriting and is not being indemnified by a party
that the firm believes will pay any judgment, or (iii) the
purchasers are demanding that the firm repurchase
securities, management has estimated the upper end of the
range of reasonably possible loss as being equal to (a) in the
case of (i), the amount of money damages claimed, (b) in the
case of (ii), the difference between the initial sales price of
the securities that the firm sold in such underwriting and the
estimated lowest subsequent price of such securities and
(c) in the case of (iii), the price that purchasers paid for the
securities less the estimated value, if any, as of
December 2015 of the relevant securities, in each of cases
(i), (ii) and (iii), taking into account any factors believed to
be relevant to the particular matter or matters of that type.
As of the date hereof, the firm has estimated the upper end
of the range of reasonably possible aggregate loss for such
matters and for any other matters described below where
management has been able to estimate a range of
reasonably possible aggregate loss to be approximately
$2.0 billion in excess of the aggregate reserves for such
matters.
Management is generally unable to estimate a range of
reasonably possible loss for matters other than those
included in the estimate above, including where (i) actual or
potential plaintiffs have not claimed an amount of money
damages, except in those instances where management can
otherwise determine an appropriate amount, (ii) matters
are in early stages, (iii) matters relate to regulatory
investigations or reviews, except in those instances where
management can otherwise determine an appropriate
amount, (iv) there is uncertainty as to the likelihood of a
class being certified or the ultimate size of the class, (v) there
is uncertainty as to the outcome of pending appeals or
motions, (vi) there are significant factual issues to be
resolved, and/or (vii) there are novel legal issues presented.
For example, the firm’s potential liabilities with respect to
future mortgage-related “put-back” claims described below
may ultimately result in an increase in the firm’s liabilities,
but are not included in management’s estimate of
reasonably possible loss. As another example, the firm’s
potential liabilities with respect to the investigations and
reviews described below under “Regulatory Investigations
and Reviews and Related Litigation” also generally are not
included in management’s estimate of reasonably possible
loss. However, management does not believe, based on
currently available information, that the outcomes of such
other matters will have a material adverse effect on the
firm’s financial condition, though the outcomes could be
material to the firm’s operating results for any particular
period, depending, in part, upon the operating results for
such period. See Note 18 for further information about
mortgage-related contingencies.
198 Goldman Sachs 2015 Form 10-K