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Finra's Settlement With Goldman Sachs

Finra's Settlement With Goldman Sachs

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Published by DealBook
Finra's settlement with Goldman Sachs over its failure to disclose that Fabrice Tourre and another representative of the firm had received Wells notices from the S.E.C.
Finra's settlement with Goldman Sachs over its failure to disclose that Fabrice Tourre and another representative of the firm had received Wells notices from the S.E.C.

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Categories:Business/Law, Finance
Published by: DealBook on Nov 09, 2010
Copyright:Attribution Non-commercial

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11/09/2010

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FINANCIAL
INDUSTRY
REGULATORYAUTHORITY
LETTER
OFACCEPTANCE,WAIVER
AND
CONSENT
NO.
2010022
4738
-01
TO:
Department
of
Enforcement
Financial
Industiy
Regulatory
Authority
(“FINRA”)
RE:
Goldman,
Sachs
&Co.
(BD
No.
361)
Respondent
Pursuant
to
FINRARule9216
of
FINRA
‘S
Code
of
Procedure,
Respondent
Goldman,
Sachs
&
Co.
(“Goldman,”
the
“Finn”
or
“Respondent”)
submitsthis
Letter
of
Acceptance,
Waiver
andConsent
(“AWC”)
forthe
purpose
of
proposing
a
settlement
of
the
allegedrule
violations
described
below.
ThisAWC
is
submitted
on
the
condition
that,
if
accepted,
FINRA
willnotbringanyfuture
actions
against
Respondent
alleging
violationsbased
on
thesamefactual
findings
describedherein.
I.
ACCEPTANCE
AND
CONSENT
A.
Respondent
herebyaccepts
and
consents,without
admitting
or
denying
the
findings,andsolely
for
the
purposes
of
this
proceeding
andany
other
proceeding
brought
by
or
on
behalf
of
FINRA,
or
to
whichFINRA
is
a
party,prior
to
a
hearing
and
without
an
adjudication
of
anyissue
of
law
orfact,
to
the
entry
of
the
followingfindings
by
FINRA:
BACKGROUND
Goldman
hasbeen
a
member
of
FINRAsince
1936.
TheFirm,
headquartered
in
New
York
City,has
approximately
7,500
registered
representatives
operatingfrom
a
total
of
18
branchoffices.Goldman
is
a
whollyowned
subsidiary
of
TheGoldman
SachsGroup,Inc.,
a
global
investment
banking,
securities
and
investment
management
firm.
The
Finn
has
no
relevant
formal
disciplinary
history
with
the
Securities
and
ExchangeCommission,
any
self-regulatory
organization
or
any
statesecurities
regulator.
 
OVERVIEW
Between
November
2009
and
May2010(the
“Relevant
Period”),
in
two
instances
Goldman
failed
to
update
Uniform
Applications
for
Securities
Industry
Registration
or
Transfer
(“Forms
U4”)
to
discloseinve stigations
when
it
was
required
to
do
soby
FINRABy-Laws,
Article
V,
Section
2(c).inthefirst
instance,
Goldman
failed
to
filean
amendment
to
FormU4
to
disclose
that
Fabrice
Tourre
hadreceived
a
“Wells
Notice
fromthe
Securities
andExchange
Commission
(“SEC”)
in
connection
withthe
agency’sinvestigation
of
an
offering
of
a
synthetic
collateralized
debt
obligation
(“CDO)
calledABACUS2007-AC
I
(“Abacus”).
In
the
secondinstance,
Goldman
failed
to
amend
another
employee’s
Form
U4to
disclosethat
hehad
received
a
WellsNotice.
These
failuresoccurred
becauseduri ng
the
Relevant
Period
Goldman
didnothave
adequate
supervisorypro cedures
and
systems
in
place
to
ensure
thatthe
registrationsgroup
within
its
globalcompliancedivisionreceived
promptnoticethat
a
registered
person
wasthe
subject
of
an
“investigation,”
as
thatterm
is
used
in
Form
U4,so
that
the
unitcould
ensure
thattheForms
U4
were
amended
accordingly.
Goldman’s
failure
to
comply
with
its
FINRABy-Law
Article
V
reporting
obligations
impactedFINRAsand
other
securities
regulators’abilities
to
discharge
their
registration,
examination,
and
oversightdut ies,
as
well
as
investorsand
other
market
participants’
abilities
to
assesstheindividuals’
backgrounds
through
FINRA
‘s
public
disclosure
program,
BrokerCheck.
By
reason
of
the
foregoing,
Goldman
violated
NASDConductRule3010
and
FINRA
Rule
2010.1
Goldman
consents
to
the
imposition
of
a
censure
and
a
fine
of
$650,000,
andan
undertaking
that
it
willcertify
that
it
has
conducted
a
review
of
its
procedures
andsystems
concerning
Form
U4
amendments
and
compliance
with
FINRABy-Laws,
Article
V,
Section2(c)
and
implemented
anynecessaryrevisions.
FACTS
AND
VIOLATIVECONDUCTBackground
Form
U4
is
used
to
registerass ociatedpersons
of
broker-dealers
with
the
appropriate
jurisdiction(s)
and/or
self
regulatory
organization(s)
(SROs”).
Disclosuresmade
in
response
to
the
questions
on
Form
U4
play
a
vitalrole
in
the
securities
industry.The
disclosures
are
used
to
determine
and
monitor
thefitness
of
securitiespro fessionals.
Timely,truthftil,
and
completeanswers
on
Form
U4
are
essential
to
meaningflul
regulation.
1
NASDConductRule2110becameFINRARule2010effectiveDece mber
15,
2008.
2

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