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Goldman (GS) Is Fined $5.5M for Non-Adherence to Record-Keeping
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The Goldman Sachs Group, Inc. (GS - Free Report) has been charged with a civil penalty of $5.5 million, per Commodity Futures Trading Commission’s (CFTC) order. Further, the order requires GS to cease and desist from committing future violations of Commodity Exchange Act and CFTC’s record-keeping provisions.
Per CFTC’s findings, GS violated the provisions of a previous order and also failed to appropriately record and retain certain audio files.
In November 2019, Goldman was levied with a civil penalty of $1 million for failure to record the phone lines of its trading and sales desk in January and February 2014 for 20 calendar days. CFTC’s order required the company to cease and desist from further violations of record-keeping regulations.
Post the 2019 order, Goldman continued to have record-keeping failures, which were in violation of the cease-and-desist provisions. It failed to record and retain audio calls due to failure in both its hardware and software systems.
The company had been using vendor service for recording calls made on mobile devices. During pandemic, specifically in March 2020, failure in the vendor’s hardware increased due to a rise in use of the vendor’s recording service.
When Goldman discovered this issue, it implemented an interim fix in May 2020. Also, in September 2020, the vendor’s hardware was replaced with another system.
Additionally, GS was using software services from a vendor that facilitated trading via a computer. In May 2020, GS discovered failure of the software system to properly record audio calls.
A permanent fix for the issue was completed in June 2022 after implementing an interim fix.
Director of Enforcement, Ian McGinley stated, “We are committed to holding swap dealers accountable when they fail to comply with their regulatory obligations and fail to abide by obligations imposed by prior CFTC orders.”
The subsequent charges against the company, leads to close supervision by regulatory authorities, thereby increasing its operational challenges.
Goldman’s shares have lost 4% over the past six months compared with the industry’s decline of 11%.
Citigroup Inc. (C - Free Report) has consented to Securities and Exchange Commission’s (SEC) cease-and-desist order, levying a civil penalty of $2.9 million on the bank. The bank’s broker-dealer unit has been charged for intentionally violating record-keeping requirements with respect to expenses incurred in its underwriting business.
C neither denied nor admitted the alleged claims of SEC’s findings.
Wells Fargo & Company (WFC - Free Report) agreed to pay a civil penalty of $35 million to settle SEC’s charges. The charges were levied on WFC for overcharging advisory fees of more than $26.8 million in over 10,900 investment advisory accounts.
Some of WFC and its predecessor firms’ financial advisers consented to reduce standard advisory fees for certain clients. These changes were handwritten or typed on the clients’ investment advisory agreements, thus reflecting the reduced fees. However, employees in the account processing unit failed to enter reduced advisory fee rates in the company’s billing systems.
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Goldman (GS) Is Fined $5.5M for Non-Adherence to Record-Keeping
The Goldman Sachs Group, Inc. (GS - Free Report) has been charged with a civil penalty of $5.5 million, per Commodity Futures Trading Commission’s (CFTC) order. Further, the order requires GS to cease and desist from committing future violations of Commodity Exchange Act and CFTC’s record-keeping provisions.
Per CFTC’s findings, GS violated the provisions of a previous order and also failed to appropriately record and retain certain audio files.
In November 2019, Goldman was levied with a civil penalty of $1 million for failure to record the phone lines of its trading and sales desk in January and February 2014 for 20 calendar days. CFTC’s order required the company to cease and desist from further violations of record-keeping regulations.
Post the 2019 order, Goldman continued to have record-keeping failures, which were in violation of the cease-and-desist provisions. It failed to record and retain audio calls due to failure in both its hardware and software systems.
The company had been using vendor service for recording calls made on mobile devices. During pandemic, specifically in March 2020, failure in the vendor’s hardware increased due to a rise in use of the vendor’s recording service.
When Goldman discovered this issue, it implemented an interim fix in May 2020. Also, in September 2020, the vendor’s hardware was replaced with another system.
Additionally, GS was using software services from a vendor that facilitated trading via a computer. In May 2020, GS discovered failure of the software system to properly record audio calls.
A permanent fix for the issue was completed in June 2022 after implementing an interim fix.
Director of Enforcement, Ian McGinley stated, “We are committed to holding swap dealers accountable when they fail to comply with their regulatory obligations and fail to abide by obligations imposed by prior CFTC orders.”
The subsequent charges against the company, leads to close supervision by regulatory authorities, thereby increasing its operational challenges.
Goldman’s shares have lost 4% over the past six months compared with the industry’s decline of 11%.
Image Source: Zacks Investment Research
GS presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Financial Misconduct by Other Banks
Citigroup Inc. (C - Free Report) has consented to Securities and Exchange Commission’s (SEC) cease-and-desist order, levying a civil penalty of $2.9 million on the bank. The bank’s broker-dealer unit has been charged for intentionally violating record-keeping requirements with respect to expenses incurred in its underwriting business.
C neither denied nor admitted the alleged claims of SEC’s findings.
Wells Fargo & Company (WFC - Free Report) agreed to pay a civil penalty of $35 million to settle SEC’s charges. The charges were levied on WFC for overcharging advisory fees of more than $26.8 million in over 10,900 investment advisory accounts.
Some of WFC and its predecessor firms’ financial advisers consented to reduce standard advisory fees for certain clients. These changes were handwritten or typed on the clients’ investment advisory agreements, thus reflecting the reduced fees. However, employees in the account processing unit failed to enter reduced advisory fee rates in the company’s billing systems.