FINRA Initiates Probe Into Goldman's "Trading Huddle" And Comparable Practices By Other Wall Street Firms
Could it be that the regulators are finally set on doing the one thing they are paid to do, i.e. regulatoring? Perhaps, especially when they are presented with all the data on a silver platter, as the WSJ did some time ago. The same WSJ reports that FINRA has now started a probe into the practice known as "trading huddles" which is merely another phrase for providing the best, most actionable data to one's preferential clients, and also a very politically correct and polite way of allegedly endorsing front-running.
The industry-funded regulator of securities firms doing business in the U.S. recently sought information from Citigroup Inc., J.P. Morgan Chase & Co. Morgan Stanley
and other firms, including details of any meetings where unpublished
research opinions or trading ideas were disclosed to nonresearch
employees or clients.
The probe follows an article in The Wall Street Journal in August about gatherings at Goldman Sachs Group
Inc. known inside the company as "trading huddles." During the
meetings, Goldman analysts gave short-term tips to traders, followed by
big clients. The tips sometimes differed from Goldman's long-term
research...While large clients routinely get extra attention and service, Finra
officials want to determine if the gatherings give an unfair advantage
to certain customers.
Goldman, however, is not the only firm involved as this has long been a pervasive practice throughout the major brokerages:
Finra's examination of the trading huddles at Goldman was expanded last
month to include about 10 other firms, according to people familiar
with the situation. Responses were due earlier this month.
Surprisingly, this could end up being more than just more posturing by Mary Schapiro's former firm:
In its letter to securities firms, Finra asked for lists of all
meetings held since July 2008 where "any non-published research opinion
and/or information … regarding a company under research coverage by the
Firm was disclosed … to non-research personnel or current or potential
customers of the firm."
The information requested by Finra includes dates and minutes of
meetings, names of attendees and the names of clients who might have
received the information.
- advertisements -