NEW YORK (AFP) – Investment giant Goldman Sachs on Tuesday said its profits fell 82 percent in the second quarter of the year against the same period last year.

Reporting net earnings of 613 million dollars, Chief Executive officer Lloyd Blankfein said the business environment had become tougher for the embattled firm.

"The market environment become more difficult during the second quarter, and as a result, client activity across our business declined," he said in a statement.

In first three months of the year, Goldman reported that profits had nearly doubled to 3.46 billion dollars.

Revenues in the second quarter reached 8.84 billion dollars, down 36 percent from the year before.

Compounding the decline, the New York-based firm reported a 600 million dollar hit from the introduction of a tax on executive compensation in Britain.

The announcement also came days after the firm said it had agreed to pay a record 550 million dollars to settle government fraud charges with the Securities and Exchange Commission.

Facing allegations of defrauding investors, the storied investment bank admitted it had made a "mistake" and given "incomplete" information to clients.

The SEC had accused Goldman of allowing a prominent hedge fund -- Paulson & Co. Inc -- to put together a package of subprime mortgages that were sold to clients, but which Paulson was also betting against.

That settlement was included in Tuesday's report.

Net revenues in Goldman's all-important investment banking arm fell 36 percent versus the second quarter of 2009, revenues from trading also fell by 35 percent.

Pay and bonuses for 34,100 staff ate up 43 percent of revenue.