Goldman Sachs to Pay $5.5M to Settle with CFTC over Recordkeeping Violations and Violating a Prior Commission Order

The U.S. Commodity Futures Trading Commission issued an order simultaneously filing and settling charges against Goldman Sachs & Co. The order stated that the leading financial service firm violated the cease-and-desist provision of a prior order and committed recordkeeping violations in connection with its failure to properly record and retain certain audio files.

The order requires Goldman Sachs to pay a $5.5 million civil monetary penalty and to cease and desist from further violations of the recordkeeping provisions of the Commodity Exchange Act and CFTC regulations, as charged.

In November 2019, the CFTC entered an order that found Goldman failed to record the phone lines of a trading and sales desk for 20 calendar days in January and February 2014, after its recording hardware malfunctioned following a software patch. The CFTC ordered Goldman to pay a $1 million civil monetary penalty and to cease and desist from further violations of CFTC recordkeeping provisions.

Goldman has since had more record-keeping failures, the latest CFTC investigation found. Specifically, Goldman Sachs used a vendor service to record calls made on mobile devices. Beginning in March 2020, increased use of the vendor's recording service during the pandemic led to increased failures in the vendor's hardware. As a result, Goldman failed to fully record and retain thousands of mobile device calls. An interim fix was implemented in May 2020, and the vendor's hardware was replaced with an alternative system in September 2020.

Separately, problems with software from another vendor, which the firm also began using in March 2020, prevented the system from recording properly at times. As a result, Goldman failed to fully record and retain thousands of calls. After implementing an interim fix, a permanent fix in the form of a software update was completed in June 2022.

The CFTC recognized Goldman Sachs' cooperation with the investigation and acknowledged the firm's representations regarding its remediation efforts.

Ian McGinley, Director of Enforcement of CFTC, said: "As this case demonstrates, the CFTC will continuously pursue swap dealers that fail to meet their recording obligations and there will be consequences for violating CFTC orders, including increased penalties. 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."

This was not the first fine for Goldman Sachs this year. This April, the firm was hit with a $15 million civil penalty​ by the regulator for violations of the CFTC's Business Conduct Standards applicable to swap dealers. Furthermore, The European Central Bank (ECB) fined Goldman Sachs' (GS.N) European unit 6.63 million euros ($7.3 million)​ for misrepresenting its balance sheet.