FINRA Fines Goldman Sachs $800k

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FINRA Fines Goldman Sachs $800k

FINRA fined Goldman Sachs Execution & Clearing, L.P. $800,000 for failing to have reasonably designed written policies and procedures established to stop trade-throughs of protected quotations in NMS stocks from November 2008 to August 2011 in connection with trading in its proprietary alternative trading system, SIGMA-X. As required by the Order Protection Rule, trading centers must trade at the best-quoted prices or route orders to the trading center quoting the best prices. FINRA found that between July 29 and 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. During that eight-day window, Goldman Sachs did not realize that it was trading through a protected quotation. The trade-throughs were caused by market data latencies at SIGMA-X and were not discovered in a timely manner. Goldman-Sachs returned $1.67 million to disadvantaged customers.

FINRA found that between November 2008 and August 2011 Goldman Sachs failed to have reasonably designed written policies and procedures established to stop trade-throughs of protected quotations in NMS stocks and also failed to regularly monitor the effectiveness of its policies and procedures designed to prevent trade-throughs of protected quotations in NMS stocks.

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.”

Goldman Sachs consented to the entry of FINRA’s findings while neither admitting nor denying the charges.

If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.

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