Goldman Sachs paying $22M to settle charges
Friday, April 13, 2012
WASHINGTON (AP) — Goldman Sachs has agreed to pay $22 million to settle regulatory charges that its analysts shared confidential research with favored clients.
The regulators alleged that Goldman analysts had weekly “huddles” from 2006 to 2011 where they discussed confidential research on stocks with the firm’s traders. The analysts then passed on the ideas to a select group of top clients, the regulators said. They said that created the risk of research being passed to special clients before it was published.
The settlement was announced Thursday by the Securities and Exchange Commission and the Financial Industry Regulatory Authority, the securities industry’s self-policing organization. Under the accord, $11 million of the penalty that Goldman is paying will go to the SEC and the other $11 million to FINRA.
In addition, the SEC censured Goldman. Censure brings the possibility that a firm or individual could face a stiffer sanction if the alleged violation is repeated.
Goldman neither admitted nor denied the allegations.
“We are pleased to have resolved this matter,” said Goldman spokesman Michael DuVally in New York. He declined further comment.
The Wall Street giant’s relationships with clients also figured in its record $550 million settlement in July 2010 of the SEC’s civil fraud charges that it misled buyers of mortgage-related investments. The SEC said Goldman sold mortgage investments without telling buyers that the securities had been crafted with input from client Paulson & Co., which was betting on them to fail.
The securities cost investors close to $1 billion in losses while helping the Paulson investment firm capitalize on the housing market bust, the regulators said. Goldman itself reaped hundreds of millions from its own bets against housing, they said.
Last June, Goldman agreed to pay $10 million in a settlement of similar charges with Massachusetts regulators. The regulators said that under Goldman’s practice, only its top-tier clients received phone calls from senior analysts with information discussed in the “huddles.” Some Massachusetts pension funds were excluded from getting calls or access to the analysts’ research, according to the regulators.
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