Goldman Sachs Group has agreed to pay $3 million to settle allegations by the U.S. Commodity Futures Trading Commission (CFTC) that its internal controls failed to prevent a potentially disruptive futures trade and that the firm did not adequately disclose the issues to the agency. The CFTC pointed out deficiencies in Goldman’s surveillance of a customer’s significant position in an oil futures contract in late December 2017. They noted that one of Goldman’s automated internal controls malfunctioned and did not properly suspend the transaction as it should have.
Goldman Sachs settles with CFTC
Goldman Sachs’ post-trade surveillance system experienced an error that prevented it from properly flagging potentially disruptive trades. Later, when the agency’s enforcement unit questioned how the firm handled the client’s orders, Goldman omitted crucial information about the issues, as stated by the regulator.
Ian McGinley, who leads the enforcement unit, emphasized the CFTC’s commitment to ensuring registrants uphold their supervisory obligations to detect and prevent disruptive trading, thereby maintaining the integrity of futures markets. As part of the settlement, Goldman neither admitted nor denied the allegations.
In addition to the CFTC settlement, Goldman recently agreed to pay $6 million in a separate settlement with the Securities and Exchange Commission for providing incomplete trading data to the regulator.
The CTFC also directed Bank of America and JPMorgan to pay $8 million and $30 million respectively to settle charges related to swap reporting failures and other violations. JPMorgan was fined for violations in swaps reporting, while Bank of America faced penalties for inadequate supervision of swaps reporting and non-compliance with reporting obligations. The commission acknowledged substantial cooperation from all three banks, leading to reduced civil monetary penalties.
Former Goldman Sachs and Blackstone employee charged
Federal prosecutors have charged a former employee of Goldman Sachs Group Inc. and Blackstone Inc. with securities fraud, alleging that he provided insider information about at least six deals to his friends. Anthony Viggiano, 26, is accused of tipping off his friends, Stephen Forlano and Christopher Salamone, about deals he learned about while working at his employers.
Damian Williams, the U.S. Attorney for the Southern District of New York, stated that Viggiano betrayed the trust of his employers by tipping his friends, emphasizing the determination to prosecute those attempting to cheat the system.
This incident is the latest series involving Goldman Sachs employees in recent years. Last year, a Goldman banker was accused of sharing stock tips with an acquaintance. Before that, there were three insider trading cases involving Goldman employees within 18 months ending in October 2019.
According to the indictment, Viggiano worked at a major investment bank’s asset and wealth management division, which sources familiar with the case confirmed to be Goldman Sachs. He had previously resigned from a position at Blackstone after the firm discovered he had been trading without obtaining pre-clearance.
A spokesman for Blackstone, Matt Anderson, emphasized the company’s unequivocal stance against the alleged behavior and stated that they have extensive compliance and training procedures in place. He further noted that the individual involved was a junior analyst in a non-investment finance role, employed for less than seven months, and left the company two years ago.
The SEC complaint alleges that Viggiano provided tips about upcoming deals involving companies such as American International Group Inc., Harmony Biosciences Holdings Inc., and CDK Global Inc. Forlano and Salamone are accused of trading on these tips, resulting in hundreds of thousands of dollars in profits.
Recently, the CTFC also accused the Mosaic Exchange Limited platform and its owner of operating a fraudulent digital asset commodity scheme. This scheme allegedly involved deceptive claims about the platform’s assets and profitable track record. The CFTC stated that the scheme impacted at least 17 individuals in the U.S. and other countries who provided the platform with bitcoin and other funds for trading purposes, only for the funds to be misappropriated.
CFTC Commissioner Kristin Johnson described the scheme as a sham and a virtual house of cards, emphasizing that Mosaic operated under pretenses regarding its trading activities.
