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January 14, 2016

Posted  January 28, 2016

Goldman, Sachs & Co. will pay $15 million to settle charges that its securities lending practices violating federal regulations.  The SEC’s order found that Goldman violated Regulation SHO by improperly providing “locates” — representations that the firm believes it can obtain a security necessary to settle a short sale — when it had failed to perform an adequate review of the securities to be located.  Specifically, Goldman employees routinely processed customer locate requests by relying on a function of Goldman’s order management system which allowed orders to be placed based on the start-of-day inventory reported to Goldman by large financial institutions.  However, this function allowed locates to be provided even when the automated system had already deemed the inventory depleted based on locate requests placed earlier in the day.  Additionally, when questioned about the firm’s lending practices by SEC examiners, Goldman Sachs provided incomplete responses that adversely affected and unnecessarily prolonged the SEC’s examination.  SEC

Tagged in: Market Manipulation and Trading Violations, Regulatory Violations, Securities Fraud,