Goldman Sachs Fined $512.5K by FINRA for Deficiency in Supervisory System

The U.S. Financial Industry Regulatory Authority (FINRA) has fined Goldman Sachs a total of $512,500 for failing to establish reasonable designed supervisory processes and system.

FINRA found that between February 2009 and mid-April 2023, Goldman failed to include warrants, rights, units, and certain OTC equity securities in nine surveillance reports designed to identify potentially manipulative proprietary and customer trading.

As a result of the gaps in its surveillance reports, Goldman could not perform reasonable supervisory reviews of trading activity in warrants, rights, units, and certain OTC equity securities for potential manipulation. The nine affected reports would have identified approximately 5,000 alerts (based on extrapolations from available data) for potentially manipulative trading activity in those securities from February 2009 through mid-April 2023.

By failing to have a reasonably designed supervisory system, Goldman violated NASD Rule 3010 and FINRA Rules 3110 and 2010.

Goldman has taken remedial actions, including adding the missing securities to all affected reports and implementing additional reviews to prevent exclusions.

The bank did not take a position on FINRA's findings but agreed to be reprimanded and promised to pay the penalty upon FINRA's acceptance of the "Letter of Acceptance, Waiver and Consent." (AWC).

Goldman Sachs will pay a fine of $512,500, of which $37,000 will be paid to FINRA and the remainder will be paid to relevant exchanges.