27 April 2015

Goldman Sachs fined $800k over dark pool failings

02 July 2014  |  2096 views  |  0 Source: Finra

The Financial Industry Regulatory Authority (Finra) announced today that it has fined Goldman Sachs Execution & Clearing, L.P. $800,000 for failing to have reasonably designed written policies and procedures in place to prevent trade-throughs of protected quotations in NMS stocks from November 2008 through August 2011 in connection with trading in its proprietary alternative trading system, SIGMA-X.

The Order Protection Rule generally requires that trading centers trade at the best-quoted prices or route orders to the trading centers quoting the best prices. FINRA found that from July 29, 2011, through August 9, 2011, there were more than 395,000 transactions executed in SIGMA-X where the execution traded through a protected quotation at a price inferior to the National Best Bid and Offer (NBBO).

During the eight-day trading period, Goldman Sachs was unaware that it was trading through a protected quotation in these instances. The trade-throughs were caused by market data latencies at SIGMA-X and were undetected in a timely manner. FINRA found that from November 2008 through August 2011, Goldman Sachs failed to establish, maintain, and enforce written policies and procedures that were reasonably designed to prevent trade-throughs of protected quotations in NMS stocks; and failed to regularly surveil to ascertain the effectiveness of its policies and procedures designed to prevent trade-throughs of protected quotations in NMS stocks.

In connection with the approximately 395,000 trade-throughs, Goldman Sachs returned $1.67 million to disadvantaged customers.

Thomas Gira, Executive Vice President, FINRA Market Regulation, said, "It is imperative that firms take steps to ensure compliance with the SEC's trade-through rule so that displayed trading interest is appropriately protected and customers do not receive executions at inferior prices. In today's highly automated trading environment, FINRA has no tolerance for firms that fail to have robust policies and procedures to protect against trading through protected quotations."

In settling this matter, Goldman Sachs neither admitted nor denied the charges, but consented to the entry of FINRA's findings. Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2013, members of the public used this service to conduct 16.5 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999. Investors may find copies of this disciplinary action as well as other disciplinary documents in FINRA's Disciplinary Actions Online database. 

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Related blogs

Create a blog about this story (membership required)

Related company news

 

Related company information

Goldman Sachs

Top topics

Most viewed Most shared
Banks on the brink as customer experience...
8814 views comments | 46 tweets | 38 linkedin
Finextra Future Money Day 1 - Live blog
5734 views comments | 7 tweets | 5 linkedin
Future Money roundup: Big banks have their...
4873 views comments | 17 tweets | 9 linkedin
SunGard explores possible sale - Reuters
4394 views comments | 15 tweets | 8 linkedin
Commerzbank venture fund invests in eToro
4252 views comments | 10 tweets | 4 linkedin

Featured job

Competitive base & commission + equity
New York City, NY, USA

Find your next job