The Financial Industry Regulatory Authority today slapped extremely effective but imperfect trading operation Goldman Sachs with a $650,000 fine for failing to disclose that two of its employees, including “Fabulous” Fab Tourre, were under investigation by the Securities and Exchange Commission.
The wrist-slap is similar to the one imposed by The U.K.’s Financial Services Authority back in September. The chief difference is in magnitude. The FSA was able to charge Goldman $27 million, or about 40 times as much as FINRA’s penalty. But the idea behind the fee is similar. FINRA says Goldman should’ve promptly informed the regulatory organization that its people were under investigation for its dealings in the Abacus 2007-AC1 CDO.
Firms are required to update a representative’s regulatory record by filing a Form U4 reporting the receipt of a Wells Notice within 30 days of learning of the Notice. In Tourre’s case, his Form U4 was not amended until May 3, 2010, more than seven months after Goldman learned of his Wells Notice, and only after the SEC filed a complaint against Goldman and Tourre on April 16, 2010.
As The Wall Street Journal points out, in the third quarter Goldman generated revenue $650,000 about once every ten minutes. So we’re sure Goldman is very sorry it messed with FINRA, merciless allocator of tiny fines.
mtaylor [at] observer.com | @mbrookstaylor