Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Huddles earn Goldman Sachs a $22m fine

Stephen Foley
Thursday 12 April 2012 23:16 BST
Comments

Goldman Sachs has been landed with another fine by regulators in the US, this time for "trading huddles" where elite hedge fund clients could have been given access to market-moving secrets from the investment bank's research analysts.

The bank agreed to pay $22m to settle charges laid by the Securities and Exchange Commission, which found at least three occasions when Goldman analysts had talked with top clients after deciding to change their "buy" or "sell" recommendation, but before that change had been formally announced.

Recommendation changes by Goldman analysts often cause a big splash in the markets, as investors react by buying or selling the stock in question. The SEC said Goldman should have had procedures in place to ensure analysts did not tip off hedge funds about their upcoming changes.

An elite band of 180 hedge funds, whose trading commissions were particularly valuable to Goldman, were invited to "huddles" with Goldman traders and analysts, where they would discuss short-term trading ideas. The bank discontinued the five-year-long practice last year.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in