Goldman Sachs fined $650,000 by FINRA

11 November 2010

Goldman Sachs has been fined $650,000 by the Financial Industry Regulatory Authority (FINRA) for failing to disclose two employees were facing an investigation by industry regulators.

According to FINRA, the investment bank waited more than seven months before revealing that Fabrice Tourre, a vice-president at the firm, and another unnamed employee had been issued with a Wells Notice by the Securities and Exchange Commission (SEC).

Mr Tourre’s notice was issued in connection with the SEC investigation into Abacus, the collaterized debt obligation in which the bank and the employee were accused of deliberately misleading investors.

Firms and organisations issued with a Wells Notice are required to inform regulators within 30 days of the notice.

Goldman only reported the issue after the SEC had filed a complaint against Mr Tourre and the bank, FINRA explained.

James S Shorris, FINRA Executive vice-president and acting chief of enforcement, said: “Goldman's failures impacted the ability of FINRA and other securities regulators to discharge their registration, examination and oversight duties, and limited the ability of investors and other market participants to adequately assess the individuals through FINRA's public disclosure program, BrokerCheck.”

The bank has consented to the findings by the organisation and agreed to review its procedures surrounding reporting.

By Jim Ottewill

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