Goldman Sachs sign is seen above floor of the New York Stock Exchange
Credit: Reuters File Photo
By Lydia Beyoud and Sridhar Natarajan
A top US financial regulator has opened an investigation into whether Goldman Sachs Group Inc. improperly charged fees to execute some of its clients’ futures trades, the latest regulatory headache for the bank.
The Commodity Futures Trading Commission privately authorized sending subpoenas to Goldman for information about fees charged for some futures block trades, according to people familiar with the matter. The probe stems from a whistle-blower tip, said one of the people, who asked not to be identified discussing the confidential probe.
Goldman agreed to pay more than $50 million to settle at least four CFTC cases last year, including three that were announced in the space of five weeks. While the penalties totaled less than one day of revenue for the New York-based bank, the string of settlements saw the bank publicly called out as a repeat offender by one commissioner.
The CFTC’s top enforcement attorney, Ian McGinley, said in October that the agency would begin to take a tougher stance on firms accused of repeatedly breaking the agency’s rules, including through harsher penalties and admissions of guilt.
Representatives for Goldman and CFTC declined to comment on the latest probe. Investigations by the regulator don’t always lead to enforcement actions and Goldman hasn’t been accused of wrongdoing by the regulator.
In September, Goldman agreed to pay the CFTC $30 million penalty for failing to “diligently” supervise its swap-dealer activities and other alleged violations. The regulator also fined the bank $3 million over its surveillance of a customer’s large position in an oil futures contract. The bank didn’t admit or deny the allegations in either case.
The latest probe into fees charged is focused on whether Goldman failed to properly keep tabs on the activities of its futures brokerage, which is registered with the CFTC, said one of the people. It involves the use of computer software to assess fees that Goldman allegedly knew contained coding errors and the charges being scrutinized are relatively small, added the person.
Goldman is enlisting several hundred new staffers and devoting other resources within the firm to help address operational concerns from the Federal Reserve, which oversees the lender, Bloomberg News reported last year.
The bank has also recently tangled with US regulators over its activities in the US stock market.
In September, Goldman agreed to pay the Securities and Exchange Commission $6 million for alleged inaccurate reporting of 163 million trades. Days earlier, the lender said it would pay a $3 million fine to the industry-backed Financial Industry Regulatory Authority to settle allegations it wrongly marked tens of millions of stock orders. Goldman didn’t admit wrongdoing in the Finra case, but did in the SEC case.