Daily Management Review

Goldman Sachs Execution & Clearing Slapped $1.8 Million for OATS and Trade Reporting Violations


07/28/2015




Goldman Sachs Execution & Clearing Slapped $1.8 Million for OATS and Trade Reporting Violations
Goldman Sachs Execution & Clearing, L.P. has been slapped a fine of $1.8 million for systemic Order Audit Trail System (OATS) reporting violations spanning a period of more than eight years by the Financial Industry Regulatory Authority (FINRA). The company had also failed requirements of filing the FINRA Trade Reporting Facility in an appropriate manner.

FINRA uses the automated market surveillance program – OATS, to detect manipulative activity and other potential violations of FINRA rules and federal securities laws. The companies enlisted in the stock market are required to regularly fill up data for OATS which Goldman Sachs had failed to adequately do for eight years in a row.

“It is critical that firms have the necessary systems and supervision in place to ensure compliance with their OATS and trade reporting obligations,” said Thomas Gira, Executive Vice President of FINRA Market Regulation.

FINRA rules mandate that companies and firms accurately produce data to the authority through the OATS order form on a regular basis.

There were a number of allegations against the firm most of which were found to be true. Goldman Sachs Execution & Clearing had failed to transmit a substantial number of order-related events to OATS for its Alternative Trading System for approximately seven years. The firm has also be held guilty of providing inaccurate data for a large number of order-related events for more than eight years.

“Goldman Sachs Execution & Clearing's Alternative Trading System had captured order event times in milliseconds but it did not report order event timestamps in milliseconds for a 10-month period,” said a communiqué of the Financial Industry Regulatory Authority.

The global finance firm also had not put in place adequate systems and controls in place to detect and prevent the violations as mandated by the Financial Industry Regulatory Authority. The authorities also found to be true the  allegations that the firm also submitted a large number of inaccurate, incomplete or improperly formatted trade reports that did not report execution timestamps in milliseconds for a three-month period.

There has been no denial or approval from the Goldman Sachs Execution & Clearing, L.P. except consenting to the entry of FINRA's findings.

Financial Industry Regulatory Authority is engaged in monitoring financial transactions of firms registered with it in order to protect the investor and maintain market integrity through effective and efficient regulation and complementary compliance and technology-based services. It is the largest independent regulator for all securities firms doing business in the United States.

As a part of this procedure, firms require to file regular information to the agency so that the body can continue to track the data for any violation of norms that can lead to losses for the investors. Investors can view the disciplinary record of any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. Any form of disciplinary action can be viewed by investors through FINRA's Disciplinary Actions Online database.There were more than 18.9 million reviews of broker or firm records were made by investors by investors through this system of FINRA in 2014.


(Source: www.finra.org & www.digitallook.com)






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