Goldman Sachs Group Inc. (NYSE: GS) just seems as though it cannot get out from under the negative spotlight. The Securities and Exchange Commission charged that the brokerage and trading firm (or bank holding company with no bank) lacked adequate policies and procedures to address the risk that during weekly “huddles.” Goldman agreed to settle the charges and will pay a $22 million penalty.
Huddles were a practice where the firm’s equity research analysts met to provide their best trading ideas to firm traders and later passed them on to a select group of top clients. The SEC noted that many of the clients and traders engaged in frequent, high-volume trading. The SEC charge also indicated that its analysts could share material and non-public information about upcoming research changes.
Another part of the settlement shows that the firm also agreed to be censured, to be subject to a cease-and-desist order, and to review and revise its written policies and procedures to correct the deficiencies identified by the SEC.
As far as what $22 million really boils down to, it is not that much. Goldman Sachs had $28.8 billion in revenues and net income from operations was $4.44 billion in 2011, but that was down from $39.1 billion in 2010 revenues and 2010 net income from operations of more than $8.3 billion.
FINRA has also announced today a settlement with Goldman Sachs for supervisory and other failures related to the huddles.
JON C. OGG
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