US Supervisor Fines Goldman Sachs $512,500 for Claims Market Manipulation Failure to Detect
A major investment bank will fork up almost $500,000 for sloppy oversight of trading, which led to possible market manipulation.
In nine surveillance reports that were meant to detect possible instances of manipulative proprietary and customer trading, Goldman Sachs failed to include warrants, rights, units, and certain OTC (over-the-counter) equity securities from February 2009 to April 2023, according to the Financial Industry Regulatory Authority’s (FINRA) Department of Enforcement.
According to the regulatory body’s findings, Goldman failed to include warrants from 2010–2021, rights and units from 2010–2022, and a surveillance report meant to identify possible wash transactions from 2010–2022.
The Financial Industry Regulatory Authority claims that the bank failed to include warrants, rights, units, and specific over-the-counter equity securities in its surveillance reports between 2009 and 2018. These reports would have identified possible instances of marking the open and marking the close, a method of market manipulation that aims to affect the price of an asset at the beginning and end of a trading session.
Weak reporting prevented Goldman from conducting supervisory examinations to identify potential instances of market manipulation, according to FINRA.
“From February 2009 to mid-April 2023, the nine reports in question would have detected almost 5,000 warnings for possibly manipulative trading conduct in those securities, based on extrapolations from the data that was available.”
Without accepting or rejecting FINRA’s conclusions, Goldman consented to a reprimand and a punishment of $512,500 for its reporting failures. Additionally, as of April 2023, the financial behemoth has taken corrective action by adding the missing transaction information to the nine surveillance reports.