One of the largest investment banks in the world will pay over half a million dollars for failing to adequately monitor trading activities – including instances of potential market manipulation.
The Financial Industry Regulatory Authority’s (FINRA) Department of Enforcement says that between February 2009 and April 2023, Goldman Sachs neglected to include warrants, rights, units and certain OTC (over-the-counter) equity securities in nine surveillance reports designed to detect potential cases of manipulative proprietary and customer trading.
According to FINRA, Goldman failed to identify securities in the reports for an “extended period,” roughly between two years and more than 12 years.
The regulatory body finds Goldman omitted warrants from October 2010 through March 2021 and rights and units from October 2010 to April 2022 in a surveillance report designed to pinpoint potential wash trades.
FINRA also says the banking giant left out warrants, rights, units and certain OTC equity securities in its surveillance reports from February 2009 until April 2018 that would have caught potential practices of marking the open and marking the close – a market manipulation technique designed to influence the price of an asset at the open or close of a trading session.
According to FINRA, the lapses in the reports left Goldman unable to conduct supervisory reviews for possible cases of market manipulation.
“The nine affected reports would have identified approximately 5,000 alerts (based on extrapolations from available data) for potentially manipulative trading activity in those securities from February 2009 through mid-April 2023.”
For its reporting lapses, Goldman agreed to a censure along with a fine of $512,500 without admitting or denying FINRA’s findings. The banking giant has also taken remedial steps and included the missing trading details in the nine surveillance reports as of April 2023.
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