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April 12, 2012 at 11:33 AM
The SEC and FINRA have settled a case with Goldman Sachs related to the bank’s failure to supervise certain of its employees participating in the firm’s “trading huddles,” and as a result, Goldman (GS) will pay $11 million fines to both the SEC and FINRA. Goldman consented to the fines without admitting or denying the findings.
In a statement, FINRA’s head of enforcement, Brad Bennett (below) said the fines were related to the weekly huddles, which the firm began in 2006 and ended in 2011 and which had previously been the subject of an investigation and action by Massachusetts securities regulators.
During those gatherings, FINRA said, Goldman analysts from its Americas equity research group met with traders from the firm’s securities division, and occasionally equity salespeople. The analysts would then disclose the securities on which they were considering making rating changes.
Under a Goldman program called the Asymmetric Service Initiative, some 180 “high-priority clients” selected by Goldman’s institutional sales group were informed of these possible changes in conference calls with the analysts. FINRA also charged Goldman with failing to monitor whether those clients then made trades based on the information they received in the conference calls, which included the analysts’ “most interesting and actionable ideas.” Goldman also failed to monitor for “possible trading in employee or proprietary trading, institutional customer, or market-making and client-facilitation accounts.”
