Goldman Sachs has been fined $22m by a US regulator for failing to prevent upcoming research from its analysts being passed on to its top clients.
The Securities and Exchange Commission (SEC) said that, between 2006 and 2011, the company held weekly huddles, often attended by sales personnel, in which analysts discussed their top short-term trading ideas and traders discussed their views on the markets.
In 2007, analysts began sharing information and trading ideas from the huddles with select clients, creating a serious risk that non-public information about upcoming changes to their published research might be distributed to the clients and the firm's traders.
Goldman has also agreed to be censured, to be subject to a cease-and-desist order, and to review and revise its written policies and procedures to correct the deficiencies identified.
Robert S. Khuzami, director of the SEC's Division of Enforcement, said: "Higher-risk trading and business strategies require higher-order controls.
"Despite being on notice from the SEC about the importance of such controls, 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."
In 2003, Goldman paid a $5m, plus $4.3m in disgorgement and interest, to settle numerous SEC charges, including one that it failed to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material, nonpublic information obtained from outside consultants about U.S. Treasury 30-year bonds.
The company settled the 2003 proceeding without admitting or denying the findings.
Good governance v resources
UCITS rules need changing
Old age dependency ratio ‘outdated’
Scope for change post-Brexit
To tackle liquidity issues