Goldman Sachs & Co.

Goldman Sachs & Co was fined a total of $512,500 due to its supervisory system was not reasonably designed to identify potentially manipulative trading activity.

The findings stated that the firm failed to include warrants, rights, units, and certain over-the-counter (OTC) equity securities in a number of its automated surveillance reports designed to identify potentially manipulative proprietary and customer trading activity. As a result of the gaps in the firm’s surveillance reports, it could not perform reasonable supervisory reviews of trading activity in warrants, rights, units, and certain OTC equity securities for potential manipulation.

The affected reports would have identified approximately 5,000 alerts (based on extrapolations from available data) for potentially manipulative trading activity in those securities. The firm added the missing securities to the surveillance reports either in response to FINRA’s investigation or through the firm’s adoption of new surveillance reports. The firm later completed remediation for all surveillance reports.

The firm’s supervisory system, including its written procedures, also did not require a review of its automated surveillance reports to ensure they included all relevant securities traded as part of the firm’s business. As a result, the firm failed to detect that the surveillance reports for potentially manipulative trading excluded warrants, rights, units, and certain OTC equity securities. The firm implemented reviews to identify if any security has been inadvertently excluded from new or modified surveillance reports.

Full details are contained herein.