Goldman Sachs Fined $1.25M by FINRA

​Goldman Sachs, the leading investment bank in the U.S., has agreed to pay a penalty of $1.25 million to settle the rule violation issue concerning fingerprinting with the Financial Industry Regulatory Authority (FINRA).

Pursuant to Federal securities laws, Goldman Sachs, as a FINRA member firm, is required to fingerprint most associated persons prior to or upon association with a firm and review the fingerprint results to check, among other things, whether a prospective associated person has previously committed misconduct that subjects that person to a statutory disqualification in accordance with Section 3(a)(39) of the Securities Exchange Act of 1934.

However, from January 2015 to November 2019, the U.S. investment banking giant failed to fingerprint and screen for statutory disqualification a great many of its non-registered associated persons based in the U.S. Additionally, between January 2015 to January 2018, Goldman failed to timely take the fingerprints of at least 1,061 non-registered associated individuals.

It is unclear whether Goldman has timely fingerprinted an additional 4,089 non-registered associated persons because of the firm’s failure to locate any documentation reflecting that it fingerprinted these individuals. In addition, Goldman failed to maintain fingerprint records for 466 non-registered associated persons although the firm was able to determine that it fingerprinted these persons.

Moreover, between April 2018 and November 2019, Goldman became and remained associated with two non-registered associated persons who were subject to disqualification. The firm failed to timely submit for processing the two persons’ fingerprints and to properly consider information in its possession about the disqualified status of one of the two persons.

According to FINRA, Goldman failed to fingerprint and properly screen its associated persons to meet Exchange Act and FINRA requirements because the firm do not maintain a reasonable supervisory system and written procedures to identify and properly screen its non-registered associated individuals. Laws and regulations that Goldman has violated include Section 17(f) of the Exchange Act and Rule 17f-2 thereunder, FINRA By-Laws, Article III, Section 3(b), Section 17(a) of the Exchange Act and Rule 17a-3 thereunder, and FINRA Rules 4511, 3110 and 2010.

In addition to the fine, Goldman has agreed to a censure and to review its systems and procedures to ensure that current systems and procedures regarding the identification, fingerprinting, and screening of non-registered associated persons are reasonably designed to achieve compliance with governing securities laws and regulations.