Legal

Goldman Sachs Fined $800,000 Over Dark Pool Pricing

Stephen Little Reporter London 3 July 2014

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The Financial Industry Regulatory Authority has fined Goldman Sachs $800,000 for failing to ensure that clients in its dark pool got the best price.

The Financial Industry Regulatory Authority has fined Goldman Sachs $800,000 for failing to ensure that clients in its dark pool got the best price.

FINRA said in a statement that from 29 July 2011 through to 9 August 2011, there were more than 395,000 transactions executed in a dark pool called SIGMA-X at a price inferior to the national best bid or offer.

The regulator said that Goldman Sachs had “failed to establish, maintain, and enforce written policies and procedures” to prevent trades such as this happening.

Dark pool trading operations allow clients to trade shares while keeping prices private until the deal is completed. They have been criticised for their lack of transparency and hurting the ability of the market to accurately price securities. US regulations require dark pools and exchanges centres to trade at the best-quoted price, regardless of where the trades are executed.

In settlement of the case, Goldman Sachs neither admitted nor denied the charges. It has already returned $1.67 million to compensate customers disadvantaged by the trades.

The fine comes amid increased scrutiny on high-speed trading and dark pools and follows the announcement last week that Barclays was being sued by the New York attorney general’s office over claims that it falsified marketing materials to mislead clients into investing in its dark pool operation. For more on this story, click here.

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