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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
2007-ACI.
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.
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When an organization gets fined by FINRA, where does the money go? Does it go to FINRA or to some other sort of charitable effort? If to FINRA, which I presume is supported by industry fees, doesn't it simply reduce the fees that need to be paid (on an aggregate basis) - so it's in part a wash?
I was wondering the same thing. Let’s face it, they must do all they can to pay top dollar to FINRA execs to keep their regulatory charade going, like the $9 million they paid to Mary Shapiro when she left FINRA to head up the SEC. In other words, you FINRA folks let us keep mugging investors for billions each month and we'll keep paying you occasional fines to cover the cost of your bogus regulatory jobs. Just make sure you nail a token scapegoat for a violation now and then to keep the masses appeased and the other regulators off our backs too. Don’t worry, if you can’t find a scapegoat we’ll pick one out for you. There are plenty to choose from.
As far as I can tell, most FINRA regulations are designed to keep the small investor from beating the big Wall Street traders at their own rigged games. After all, even with all their incredible market power, inside information, regulatory exemptions, and political influence, the big boys somehow still manage to occasionally get on the wrong side of the trade, and we can’t have that now can we. Silver anyone?
$650K... cost of doing business. I wouldn't be surprised to see line items in GS projected budgets for fines, bribes, etc... why not? It's not like everything else is in plain view anyhow. Or that anyone is going to do anything about it anyhow. What a joke.
...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,...
Right. The bottom line is you don't know where the fuck they're going with your order once it's in SigmaX. Worse - they've probably even figured out how to rip your eyeballs out AND have you beat the VWAP or whatever your official trade analytics benchmark is. Fuckers.
This guy Harfouche could have gotten canned for not declaring the (well exercised) trading authorization he has on his girlfriend's PA or something. Or maybe it's more about the girlfriend herself and not the trading. Gotta figure - given this guy's position it's probably not even worth his time to try and hustle some private transaction on the sly....so what other compliance violations are that serious? I'm sure http://dealbreaker.com/ is on it...
In case you were wondering what Sergey walked with...
Well, he just wasn't up to Goldilock's high standards now, was he. Did nothing wrong, didn't fuck any clients over, hurt nobody, ripped no eyeballs out, detached no scrota sacks. A fate more ignoble than death, being dismissed from Goldman for not breaking the Laws of Nature and Nature's God.
Doing God's Work since Wheneverthefuck.
Ya' know, usually when I talk to myself I try to keep t private, but I just can't help it....
Can you imagine how embarrassed and pissed off Goldman employees must be when publicly affronted about "Doing God's Work?"
When it was in fact a senior Goldman official who first uttered the statement in public.
In a House of Worship, no less.
Isn't there something in the Bible about money changers being Cast from the Temple?
Would do well to pause upon that when we take inventory at day's end.
FINRA is fundraising. The U.S. government is fundraising. That's why they reached different conclusions...
I had to deal with compliance at a bank. What a bunch of assholes. Can you believe they made me ride UNG down 5 fucking points after I had figured out it was a fraud because I had not entered a stop the day I bought it? They could have given me a waver. They were pissed because I called in too much to make trades and was making mad bank for myself. They wanted to make an example out of me. What a bunch of fucking lazy arrogant pricks.
Can you translate into English? I don't understand all the trading slang here. What exactly did you do and the broker do? And how was it wrong? I'm not being sarcastic, I just don't understand what you are saying.
i think the etrade baby needs his diaper changed
Nobody knows the trouble I've seen .... :-).
But seriously. I understand I don't get all the trader slang, and I'd like to have it translated.
When you work in the industry, you have to run everything you do through the compliance department. You tell them everything and ask permission for everything you do in your personal accounts. The compliance department makes arbitrary rules and rulings about what you are allowed to trade and when. Because they are dickweeds who are too lazy to do their jobs, their sole motivation is to keep you from calling them. That means they screw with you and make rules to slow your trading. So I bought some UNG for a quick trade. I was up. I was not allowed to sell it. I was forced by the compliance department to then ride it into a loss. The whole time I was explaining to them the contango effect was going to make it a long term loser no matter what and making me hold it was financial murder. They thought it was fukn funny.
Thank you. I had missed that you were an industry insider. I have the impression that UNG is similar in operation to USO, which uses a 4-day front-month rollover period near the monthly expiration date.
Clearly that sucks because everyone on the street knows about this and they are frontrunning USO every month.
Too bad, he only just made MD in 2009!
LOL
http://moneyistheway.blogspot.com/2009/11/more-new-goldman-sachs-managin...
"It is thereby precisely at the level of block order aggregation that potential front-running violations can occur..."
SEC Mary "Ball Buster" Schapiro Will Get Right On That...
As soon as she is done cracking down on HFT... High Frequency Tranny-porn downloading by the staff...
Tyler,
Been following up on old threads with new posts. Did you know that there are alot of great things to buy at the Jersey store and for Uggs?....Is this the end of Captcha?
Rogue trader, works everytime.
Nice try, TD, but your bias is blatantly absurd and makes you appear ignorant (which I don't believe you are). Violations of "failure to disclose to compliance" are usually related to not disclosing an outside account (not allowed) of a "related" person (e.g. spouse), material interest in an outside private or public company (e.g. b.o.d. position), and have nothing to do with Goldman Sachs' internal activities.
One does not need to "inform" GS Compliance of anything when it is related to internal activities, as "the system" knows everything that is happening (best IT systems on Wall Street by a country mile)