Goldman Sachs (GS) Under Investigation Over Futures Trading Fee
The Goldman Sachs Group, Inc. GS is being investigated for fees that it charges for futures trading. The investigation is being carried out following a whistle-blower tip. The news was first reported by Bloomberg, citing people with knowledge of the matter.
The Commodity Futures Trading Commission (“CFTC”) has privately authorized sending warrants to GS to receive information about fees charged for some futures block trades.
Goldman Sachs declined to comment and the CFTC did not immediately respond to requests for comment.
In 2023, GS had to pay more than $50 million in fines to the CFTC to settle a couple of cases.
In April, the investment bank agreed to pay $15 million to settle claims that it had failed to make proper disclosures and communicate fairly to swap customers.
In August, the bank was charged with a civil penalty of $5.5 million, per the CFTC’s order. The order required GS to cease and desist from committing future violations of the Commodity Exchange Act and CFTC’s record-keeping provisions.
Per the CFTC’s findings, GS had violated the provisions of a previous order, and failed to appropriately record and retain certain audio files.
In November 2019, Goldman Sachs was levied with a civil penalty of $1 million for failure to record the phone lines of its trading and sales desk in January and February of 2014 for 20 calendar days. The CFTC’s order required the company to cease and desist from further violations of record-keeping regulations.
However, post the 2019 order, GS continued to have record-keeping failures, which were in violation of the cease-and-desist provisions. It failed to record and retain audio calls due to failure in both its hardware and software systems.
Then again, the bank had to pay $30 million for failing to diligently supervise a wide range of its swap dealer activities and for extraordinary failures regarding swap data reporting.
Over the past six months, shares of GS have gained 12.4% compared with the industry’s 4% rally.
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Currently, GS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Legal Issues Faced by Other Finance Companies
In November 2023, Morgan Stanley MS agreed on a $6.5-million settlement with six state attorneys general, led by New York attorney general Letitia James. The firm’s U.S. wealth management business, earlier known as Morgan Stanley Smith Barney LLC, was charged with failing to protect customers’ personal information while shutting down two data centers in 2016.
MS was accused of negligence in properly decommissioning computers that contained unencrypted customer data.
According to the agreement released by attorney general James, “Morgan Stanley failed to decommission its computers and erase unencrypted data in certain computer devices that were later auctioned while still containing consumers’ personal information, including data belonging to 1.1 million New Yorkers.”
Likewise, Washington Trust Bancorp, Inc.’s WASH wholly-owned subsidiary, The Washington Trust Company, agreed on a settlement with the U.S. Department of Justice to resolve allegations that Washington Trust violated fair lending laws in Rhode Island between 2016 and 2021.
WASH was required to provide $7 million in mortgage loan subsidies for mortgage, home improvement or refinance loans in specific census tracts in Rhode Island over five years.
Also, the company had to commit $2 million for focused community outreach and marketing efforts.
The settlement did not include any civil monetary penalties.
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