First Casualty Of Goldman's New "Client Facing" Regime Is Down, As Head Of European Block Trading Is Sacked Over Compliance Violations
The first casualty of Goldman's new "client facing" regime, now that prop trading is presumably dead and all prop traders have shifted one seat to the left, pretending they all do flow (even as they still take massive inventory positions) is Alexandre Harfouche - a managing director and head of the firms' European block trading divions. Harfouche was sacked for "failing to make proper disclosures to the bank’s compliance department" according to the FT. And now that Goldman is spreading the lie that it no longer does prop trading even thought it, well does, block trading is basically the latest iteration in the nomenclature of what Goldman does when commingling prop and client order flow, before it proceeds to split up an order block via internalized algos, or dumping it in the market. It is thereby precisely at the level of block order aggregation that potential front-running violations can occur, which is why Zero Hedge would be very interested to find out just what were the circumstances associated with Harfouce's termination. Unfortunately, "while
Goldman did not specify the reasons for Mr Harfouche’s departure,
people close to the situation stressed that no securities law had been
violated and no client had been harmed by the events that led to his
dismissal." So he was just fired on general principle? Yeah, right. And while we were trying to access Harfouce's FSA record, we had no luck as the now defunct English regulator's website is down. Lovely.
Incidentally, FINRA today fined Goldman some lunch money ($650,000) for an action which we highlighted way back in April that Goldman is in violation over. On April 17, we asked (rhetorically) "Did Goldman And Tourre Break FINRA Regulations By Not Reporting "Fab Fabrice's" Wells Notice Receipt?" Specifically, we said:
What is however without question, is that Fabrice Tourre, who as we reported yesterday, is a registered broker dealer, has a responsibility to modify his/her U-4 within 30 days of the Wells Notice receipt, yet as of yesterday there was still "no disclosure of any event about this broker." Assuming Goldman received the Wells 31 days ago or more, it begs the question did the firm, by allowing Tourre not to report the Wells Notice, break Finra regulations, and just why it believes it has the facility to do this?
The Financial Industry Regulatory Authority said it fined Goldman, Sachs & Co. $650,000 for failing to disclose that two of its registered representatives had received Wells Notices, which indicate that investigations of operating practices are under way. One of the notices involved Fabrice Tourre and was issued in connection
with the Securities and Exchange Commission's investigation of Goldman’s
offering of a synthetic collateralized debt obligation called ABACUS
Well, at least FINRA reads us. As for the the second individual under Wells, it is unclear: "FINRA did not name the other Goldman representative." It doesn't matter. As Lloyd made it all too clear, the fabulous Fab acted all alone when the firm broke all sorts of rules in its CDO flap, and nobody else at Goldman ever had any clue that there was gambling going on.
Our regulators are, as usual, pathetic.