Goldman Sachs (Goldman) has agreed to pay securities regulators $22 million to settle claims that it did not have adequate policies in place to prevent research tips from being inappropriately passed on to select clients. The Securities and Exchange Commission (SEC) and The Financial Industry Regulatory Authority will each receive $11 million. According to the SEC, Goldman conducted “trading huddles” where research analysts developed trading tips and then passed on those tips to Goldman traders and select clients; some of the ratings were different from those published in Goldman’s weekly reports. The huddles “created a serious and substantial risk that analysts would share material, nonpublic information concerning their published research.” The SEC also claims that “…Goldman failed to implement policies and procedures that adequately controlled the risk that research analysts could preview upcoming ratings changes with select traders and clients.” Goldman has agreed to perform a “comprehensive” review of all policies related to the investigation.
New York Times: Goldman Fined $22 Million Over Trading Huddles (12 April 2012)
(Source: New York Times)