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.
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. FINRA further accused the bank of failing to install a supervisory system, that would have ensured compliance 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.
Risk Management for Businesses in Today’s WorldGo to article >>
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.