Goldman Sachs fined $22m over flaws at weekly 'huddles'
- 12 April 2012
- From the section Business
Goldman Sachs has been fined $22m (£13.8m) by US regulators to settle charges that some "top clients" may have been tipped off about stocks.
The Securities and Exchange Commission (SEC) said that the bank lacked policies to prevent leaks from their weekly "huddles" on equity research .
That sort of information includes an analyst's recommendation on whether to buy or sell stocks.
As part of the deal, Goldman neither admitted nor denied the charges.
The SEC has been criticised over its continued use of settlements where banks do not admit liability in the aftermath of the financial crisis.
"Despite being on notice from the SEC about the importance of such controls, Goldman failed to implement policies and procedures that adequately controlled the risk that research analysts could preview upcoming ratings changes with select traders and clients," said Robert Khuzami, the SEC's head of enforcement.
The SEC also said these risks were increased by the fact that many of the clients and traders engaged in high-volume trading - where trading algorithms are used to place bets on stocks.
Goldman has been the subject of vocal criticism recently.
Greg Smith, who headed Goldman's equity derivatives business in Europe, quit the bank in a scathing editorial for the New York Times, saying its environment was "toxic and destructive".
Goldman has been criticised over its role in the global financial crisis, including the US housing market slump and the Greek government's debt problems.
But Goldman's boss, Lloyd Blankfein, rejected these claims and said the attacks did not reflect the banking giant's values.
People such as New York mayor Mike Bloomberg and current employees have expressed support for the bank.
Rolling Stone magazine notoriously likened the bank to "a vampire squid wrapped round the face of humanity".
Mr Blankfein once told the Sunday Times that banks were "doing God's work", a phrase which made headlines around the world - but was meant as a joke.
The SEC opened a fraud investigation in 2010 over the marketing of mortgage investments as the US housing market faltered.
These featured e-mails from trader Fabrice Tourre saying that "the entire system is about to crumble any moment" in 2007.
Goldman agreed to pay $550m to settle civil fraud charges of misleading investors in 2010 - the biggest fine for a bank in the SEC's history.
Goldman was also fined £17.5m by the UK's financial regulator, the Financial Services Authority, for failing to tell it that the bank was being investigated by the SEC.