Goldman Sachs pays $10m fine in securities probe
Published 10/06/2011 | 05:00
Goldman Sachs agreed to pay a $10m (€6.9m) fine and stop holding private meetings of stock analysts and traders known as "huddles" to settle an investigation by Massachusetts's chief securities regulator. The settlement ends a two-year probe by William Galvin, the secretary of the commonwealth, into New York-based Goldman Sachs's 'Asymmetric Service Initiative', in which information on analysts' recommendations was disseminated earlier to favoured clients.
The company will "permanently discontinue" the practice, Mr Galvin's office said in a statement yesterday.
The probe concluded that the dissemination by equity analysts of unpublished short-term trading ideas was "a dishonest and unethical violation of the Massachusetts Uniform Securities Act by putting certain clients at an advantage over others", Mr Galvin's office said.
Goldman Sachs analysts, who publish stock recommendations for long-term investments, attended weekly meetings where they shared short-term trading ideas, the 'Wall Street Journal' reported in 2009.
Mr Galvin's office sent a subpoena to Goldman Sachs shortly after the article was published and the Securities and Exchange Commission and Financial Industry Regulatory Authority, which polices brokerages, also began examining the practice.
"We are pleased to have resolved this matter with the Massachusetts securities division," said Stephen Cohen, a Goldman Sachs spokesman.
The settlement added that nothing in the settlement "shall be construed as a finding or admission of fraud".