FINRA Fines Goldman Sachs $2.5 Million for Incomplete Reporting

The Financial Industry Regulatory Authority (FINRA) has fined Goldman Sachs & Co. LLC $2.5 million, as the broker dealer failed to report the entirety of its conventional options positions between January 2010 and July 2016.

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On top of the company’s incomplete reporting, certain executed options trades had exceeded the position restrictions in three different securities within four years, according to the Settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term. FINRA further accused the bank of failing to install a supervisory system, that would have ensured Compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term with the guideline set by the regulator.

FINRA and Goldman Sachs' Reactions

FINRA stated that Goldman Sachs did not do its job properly regarding reporting to the regulatory authority: “The firm failed to establish and maintain an adequate supervisory system, including a system of follow-up and review, that was reasonably designed to achieve compliance with the rules governing the reporting of options positions to the [Large Options Positions Reporting] system,” FINRA said.

Goldman Sachs, on the other hand, neither denied nor admitted to any wrongdoing on its behalf within the context of the settlement.

Misreporting Significant Details and Past Transgressions

In the six and a half year period of partial reports, Goldman Sachs had not accounted for 16,700 conventional options within 6.8 million incidents, FINRA claims in the settlement. In addition, the firm did not accurately report similar incidents between 2010 to 2014. The submitted records had indistinguishable account names, invalid residential addresses, incorrect tax numbers, and even more formatting issues.

Goldman Sachs is no stranger to this kind of situation. Back in 2012, the firm paid FINRA $50,000 for misreporting options positions between January 2010 and March 2011.