Goldman Sachs Fined $650,000 for Failing to Disclose SEC Probe
Goldman Sachs Group Inc. will pay $650,000 to resolve a brokerage regulator’s claim that the company failed to disclose that trader Fabrice Tourre and another employee were facing a U.S. Securities and Exchange Commission probe.
The Wall Street firm violated Financial Industry Regulatory Authority rules when it didn’t update agency records for the two employees within 30 days of learning of the SEC probe from a so- called Wells notice in 2009, Washington-based Finra said today in a statement. The records weren’t updated until May 3, more than two weeks after the SEC sued Tourre and Goldman Sachs for misleading investors in sales of financial products linked to subprime mortgages, Finra said.
“Goldman’s failures impacted the ability of Finra and other securities regulators to discharge their registration, examination and oversight duties,” James Shorris, the industry- funded regulator’s acting enforcement director, said in the statement. The delay also “limited the ability of investors and other market participants to adequately assess the individuals through Finra’s public disclosure program,” he said.
The SEC suit filed on April 16 accused Tourre and the firm of defrauding investors in a collateralized debt obligation known as Abacus by failing to disclose that hedge fund Paulson & Co. helped pick underlying securities and planned to bet against them. Tourre has denied wrongdoing and is fighting the SEC lawsuit. The second employee wasn’t named in the complaint.
Goldman Sachs, which agreed in July to pay $550 million and change its business practices to settle the SEC claims, resolved Finra’s claims without admitting or denying wrongdoing.
“We’re happy to have put this matter behind us,” Goldman Sachs spokesman Michael DuVally said in an e-mail statement.
Goldman Sachs’s London unit was fined about $27 million by U.K. regulators in September for failing to disclose the SEC’s investigation.
To contact the reporter on this story: Joshua Gallu in Washington at jgallu@bloomberg.net.
To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.
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