NEW YORK ( TheStreet) -- It's difficult to find sympathizers with Goldman Sachs ( GS) these days, but bear with me for a moment. The Wall Street firm reached a $550 million settlement with the Securities and Exchange Commission this week, a few days ahead of its earnings report on Tuesday. Goldman didn't admit to the charges filed against it, nor did it deny them. Instead, the bank said it had made a "mistake" by providing "incomplete information" to investors in a deal it structured in 2007. Here's why Goldman settled with the SEC: To put accusations of fraud behind it and move forward. Those accusations -- though still unproven -- threatened the firm's ability to do business by spooking clients. They also helped evaporate as much as $30 billion in shareholder value over the course of a few months, with Goldman's stock plummeting as much as 17% on the day allegations hit The Street.
Goldman CEO Lloyd Blankfein has a duty to serve shareholders and the firm's reputation is its most valuable asset. Had he and the legal team not hammered out a deal to resolve the fraud charges, there may have been a drawn-out legal battle that could have led to piggy-back lawsuits by private investors . By the end of such an ordeal, the damage to Goldman's name may have been unsustainable, regardless of the outcome of Goldman vs. the SEC. It also may have been more costly than the $550 million settlement price tag. As for the SEC, anyone who thinks this case is a victory is completely absurd. Rob Khuzami, head of the SEC's enforcement division touted the settlement as "the largest penalty ever assessed against any investment bank or other Wall Street firm in the history of the SEC." But that's really just indicative of how piddling the SEC's earlier fines have been: WorldCom, which actually was proven to have perpetrated massive accounting fraud, only had to shell out $750 million. In just the context of Goldman Sachs, the $550 million charge represents just two weeks' worth of profits, as ProPublica points out, and less than 2% of the market value which the SEC helped erase.