Goldman Sachs fined $22m over flaws at weekly 'huddles'

Goldman Sachs HQ Goldman, based in New York, has been attacked in a very public way recently

Related Stories

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.

'Vampire squid'

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.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

  • Alana Saarinen at pianoMum, Dad and Mum

    The girl with three biological parents


  • Polish and British flags alongside British roadsideWar debt

    Does the UK still feel a sense of obligation towards Poles?


  • Islamic State fighters parade in Raqqa, Syria (30 June 2014)Who backs IS?

    Where Islamic State finds support to become a formidable force


  • Bride and groom-to-be photographed underwaterWetted bliss

    Chinese couples told to smile, but please hold your breath


  • A ship is dismantled for scrap in the port city of Chittagong, BangladeshDangerous work

    Bangladesh's ship breakers face economic challenge


BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.