Strong results from Goldman Sachs yesterday were overshadowed by the fallout from the US civil fraud case against the bank, as UK regulators opened their own probe and fresh details emerged about the security at the centre of the controversy.

Goldman announced better-than-expected net earnings of $3.5bn in the first quarter and issued a forceful denial of the charges by the Security and Exchange Commission. On Friday, the SEC accused the bank and one of its vice-presidents of hiding from investors that the hedge fund Paulson & Co influenced the composition of a mortgage-backed security it wanted to bet against.

“We would never intentionally mislead anyone, certainly not our clients or a counterparty,” Greg Palm, Goldman's general counsel, said. “We have never condoned and would never condone inappropriate behaviour by any of our people.” Mr Palm said the sharp losses incurred by the collateralised debt obligation, a mortgage-backed security, were due to the collapse of the US housing market, rather than the product's specific composition.