FINRA Levies $1.8 Million Fine on Goldman Sachs Subsidiary

FINRA’s latest order stems from a systemic Order Audit Trail System (OATS) reporting violation at Goldman Sachs

The Financial Industry Regulatory Authority (FINRA) has levied a fine against Goldman Sachs Execution & Clearing, L.P., a subsidiary of the banking giant Goldman Sachs, for a sum of $1.8 million, according to a FINRA statement.

FINRA’s latest order stems from a systemic Order Audit Trail System (OATS) reporting violation at Goldman Sachs, which spanned a period of more than eight years. Additionally, the fine was stipulated on repeated failures in accurately submitting required trade reports to the appropriate FINRA Trade Reporting Facility (TRF).

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Consequently, Goldman Sachs Execution & Clearing, L.P. neither admitted nor denied the charges lobbied against them by FINRA, though ultimately consented to the entry of FINRA’s findings.

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FINRA regulations require all financial firms to provide applicable order information to OATS following a streamlined process and consistent manner. For a period of nearly seven years however, Goldman Sachs Execution & Clearing failed to transmit a wide spectrum of order-related events to OATS for its Alternative Trading System (ATS), and in some isolated instances eight years.

Moreover, despite the fact that Goldman Sachs Execution & Clearing’s ATS captured order event times in milliseconds, it failed in adhering to report order event timestamps in milliseconds for approximately ten months. During a subsequent period of review, Goldman Sachs Execution & Clearing also did not implement adequate systems and controls in place, neither capable of detecting nor curbing the aforementioned violations.

According to Thomas Gira, Executive Vice President of FINRA Market Regulation, in a recent statement on the fine, “OATS data is integral to FINRA’s automated market surveillance program to detect manipulative activity and other potential violations of FINRA rules and federal securities laws. It is critical that firms have the necessary systems and supervision in place to ensure compliance with their OATS and trade reporting obligations.”

FINRA is the largest independent regulator in the US, responsible for the oversight of all securities firms doing business domestically. The regulator made headlines recently after slapping a fine on Morgan Stanley Smith Barney (Morgan Stanley) and Scottrade for a total of $950,000.

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