Investment bank Goldman Sachs on Tuesday announced profit of $3.46 billion for the first quarter (January-March) of 2010, even as it faced a double embarrassment of the U.K. market regulator joining the United States' Securities and Exchange Commission in announcing fraud investigations into the firm's activities.

Goldman Sach's first quarter performance came on the back of net revenues of $12.78 billion with an annualised return on equity of 20.1 per cent for the quarter. The bottom line was boosted by especially strong performance in the bank's fixed income, commodities and currency division, which generated quarterly net revenues of $7.39 billion.

While Goldman noted that compensation and benefits — including bonuses — to its staff had dropped to 43 per cent of net revenues for the quarter, down from 50 per cent a year ago, it still left its staff with a combined pay package of $5.49 billion, or about $169,000 on an average per employee.

The firm's stellar performance, in the face of continuing economic woes in the U.S., came shortly after the U.K.'s Financial Services Authority announced that “Following preliminary investigations the FSA has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to recent SEC allegations.”

The regulator added that it would be liaising closely with the SEC in this review.

Last week the SEC announced that it had charged Goldman Sachs and one of its vice presidents, Fabrice Tourre, for “defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages,” even as the U.S. housing market began to collapse.

The regulator had alleged that when Goldman Sachs structured and marketed a synthetic collateralised debt obligation (CDO) whose value was based on the performance of subprime security it did not disclose to investors the fact that Paulson and Company — a major hedge fund that had bet against CDO — played a key role in the decision to include that CDO in investors' portfolios.