Goldman Sachs, as per FINRA, failed to detect certain securities in its reports over an extended period, spanning from two years to more than 12 years.
FINRA discovered that Goldman Sachs excluded warrants from its reports from October 2010 to March 2021 and omitted rights and units from October 2010 to April 2022. These reports were intended to identify potential wash trades.
Additionally, the regulatory body found that Goldman Sachs did not include warrants, rights, units, and specific OTC equity securities in its surveillance reports from February 2009 to April 2018. These omissions could have identified potential instances of market manipulation techniques like marking the open and marking the close, influencing asset prices at the start or end of a trading session.
Due to these reporting deficiencies, Goldman Sachs was unable to conduct supervisory reviews to detect possible cases of market manipulation. FINRA estimates that the nine affected reports could have flagged around 5,000 alerts for potentially manipulative trading activity between February 2009 and mid-April 2023.
To resolve the matter, Goldman Sachs consented to a censure and agreed to pay a fine of $512,500 without admitting or denying FINRA’s findings. Additionally, the bank has implemented corrective measures and has included the previously missing trading details in the nine surveillance reports as of April 2023.