For now, clients of Goldman Sachs are standing behind the bank after the top U.S. securities regulator slapped charges against the Wall Street powerhouse over its marketing of a subprime mortgage product.

Across Asia, the investment bank's corporate clients appeared content to stay with Goldman despite a legal storm surrounding the firm after Friday's fraud charges from the U.S. Securities and Exchange Commission (SEC).

Asian regulators also seemed willing to wait and see how the SEC case against Goldman plays out rather than make any rushed judgments. As the financial world sifts through details of the case, it's unlikely Goldman clients would take any drastic action at this early stage.

But, if the scandal deepens -- say, for example, the SEC's probe widens and casts an even darker cloud over Goldman's reputation -- clients may become more inclined to defect.

Goldman Sachs is just the first to get rapped on its knuckles. The other big Wall Street banks will also have their turn. Nobody is 100 percent safe, said a Hong Kong-based hedge fund manager who uses Goldman's' prime brokerage services.

The fund manager declined to be identified due to the sensitive nature of the case.

Scrutiny of how Goldman handled its position on the U.S. housing market is not new and has been the subject of media attention since the financial crisis. Still, the SEC charges against Goldman were both extraordinary and a surprise and could hurt the bank should the federal case succeed.


That prospect was not deterring some of Goldman's top clients in Asia on Monday.

One of those clients is South Korea's Samsung Life, the country's largest insurer, which has retained Goldman to help handle the company's $4.5 billion initial public offering.

I don't see any impact on the IPO process, said a Samsung Life official, who was not authorized to speak publicly about the matter.

Goldman for years enjoyed a duopoly with Morgan Stanley in Asia's prime broking space -- the part of the bank that services hedge fund clients.

While some European banks have encroached on that duopoly lately, Goldman still remains a strong force in the hedge fund sector across Asia. So far, that status does not seem threatened.

Goldman has called the lawsuit completely unfounded, adding: We did not structure a portfolio that was designed to lose money. A Hong Kong-based Goldman spokeswoman declined to comment on the issue on Monday.


A South Korean financial regulatory source said the authorities were closely following developments and have no specific plan at this moment to do anything.

The source added there is little the regulatory agency can do while Goldman and the SEC are still in dispute.

That stance was echoed across Asia on Monday, in financial centres from Jakarta to Hong Kong.

The muted response from Asian regulators was due in part because subprime mortgage securities were never a widespread product in the region.

Goldman has dazzled investors by reporting staggering quarterly profits before and after the financial crisis, often setting Wall Street earnings records.

Its franchise is the stuff of legend in the United States and Europe. Goldman is a top investment bank in Asia, too, though league table rankings suggest that franchise is not as strong as in other parts of the world.

The bank is among those handling a more than $20 billion equity offering by Agricultural Bank of China which could be the largest IPO ever.

Obviously the charges are serious, but I'm gonna reserve any judgment until the court case runs through, said Neel Kashkari, who ran the $700 billion Troubled Asset Relief Program (TARP) under former U.S. Treasury Secretary Henry Paulson.

I could see it giving more momentum to reforms, said Kashkari, a Goldman Sachs alumni like his former boss Paulson.

Kashkari, now head of new investment initiatives at Pacific Investment Management Co, was speaking on the sidelines of a Singapore banking conference.

(Additional reporting by So-eui Rhee and Choonsik Yoo in SEOUL, Sara Webb in JAKARTA, Saeed Azhar and Kevin Lim in Writing by Michael Flaherty; Editing by Jean Yoon and Ian Geoghegan)