Goldman Sachs Group Inc. leads in underwriting initial public offerings where investors lose money, evidence shows as money was lost by invetors in 8 of the firm’s 10 IPOs in 2005. This led to a 10.8% drop in shares of the world’s most profitable securities firm. Goldman Sachs earned about $120 million from organizing IPOs this year, Bloomberg data reveal. However, those who bought stocks Goldman underwrote suffered losses of about 30%.

In comparison, IPOs underwritten by Morgan Stanley, Goldman’s closest competitor, added 4% on average.
``Goldman has turned its back on the `buy side’ and chosen to do deals in a way that benefits their investment-banking clients,’’ said Ben Holmes, an IPO specialist at Boulder, Colorado-based Protege Funds LLC.

Goldman has, however, been the leading IPO firm on Wall Street in the past three out of six years.

``We would not have had the success in our equities business without taking into consideration the interests of both our buy side clients and issuing clients,’’ said Goldman spokesman Peter Rose.

Still, the investment bank may be just in a bad streak. On average, IPOs underwritten by Goldman were seen to add 41% on average and outperformed those marketed by its competitors Morgan Stanley, Merrill Lynch & Co. and Credit Suisse First Boston. This year saw a decline in Standard & Poor’s 500 index that amounted to 1.9% which partly explains the poor performance of the IPOs.