Goldman Sachs unit fined for lax policies


The Financial Industry Regulatory Authority (FINRA) has fined a Goldman Sachs subsidiary for lax policy documentation in breach of the U.S. Security Exchange Commission's Order Protection Rule.

FINRA's intervention has resulted in a hefty $800,000 fine (1 July 2014) as a result of deficient written policies and procedures at Goldman Sachs Execution and Clearing, L.P. on protected quotation prices for investor stock orders on the SIGMA-X alternative-trading-system.

FINRA's Thomas Gira, executive vice president of market regulation said: "It is imperative that firms take steps to ensure compliance with the SEC's trade-through rule so that displayed trading interest is appropriately protected and customers do not receive executions at inferior prices."

FINRA said the firm's failure to make available the National Best Bid and Offer (NBBO) rate for client trade-through order requests on protected NMS stocks - between November 2008 to August 2011 - effectively excluded investors from accessing the cheapest best bid price available.

The firm has since reimbursed $1.67 million to clients disadvantaged by its oversight in not offering the NBBO rate on almost 395,000 trade-through stock orders.

FINRA's press release added: 'In settling this matter, Goldman Sachs neither admitted nor denied the charges, but consented to the entry of FINRA's findings.'

Source: FINRA Newsroom