Goldman Sachs Group Inc. (GS) agreed to pay $7 million to resolve regulatory claims it failed to properly supervise commodities trading accounts, the U.S. Commodity Futures Trading Commission said.
The regulator accused the New York-based firm’s Goldman Sachs Execution & Clearing LP unit of failing to supervise subaccounts managed from 2007 to 2009 by a broker-dealer that had engaged in “questionable conduct,” the CFTC said in a statement today. Goldman Sachs agreed to disgorge $1.5 million in fees and commissions it had collected from the broker and pay a $5.5 million civil penalty, the agency said.
“When registrants become aware of questionable activity, they must not simply rely on assurances from interested parties and their representatives, but instead must diligently investigate,” said David Meister, the CFTC’s enforcement chief, in a statement. “As this case indicates, the Commission will hold registrants accountable if they fail in this regard.”
In its first-quarter financial disclosures last year, Goldman Sachs disclosed its cooperation with an ongoing CFTC investigation into supervision of a client broker-dealer. The CFTC said Goldman Sachs “knew or should have known that the client’s subaccounts maintained at GSEC were actually accounts belonging to customers of the broker-dealer client and not the client’s proprietary accounts,” the company said.