Huddles earn Goldman Sachs a $22m fine
Stephen Foley
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
New York
Friday 13 April 2012
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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.
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