FINRA Unleashes Dark Pool Fury On Goldman Next With Whopping $800,000 Fine

Tyler Durden's picture

In case there is still any confusion on whose behalf the US regulators work when they "fine" banks, the latest announcement from Finra should make it all clear.

Recall the spectacle full of pomp and circumstance surrounding NY AG Scheinderman's demolition of Barclays after it was announced that the bank had lied to its customers to drive more traffic to Barclays LX, its dark pool, and allow HFT algos to frontrun buyside traffic. Yes, it was warranted, and the immediate result was the complete collapse in all buyside Barclays dark pool volume, meaning predatory HFT algos would have to find some other dark pool where to frontrun order flow. Such as Goldman's Sigma X.

Which brings us to, well, Goldman's Sigma X, which moments ago, in a far less pompous presentation, was fined - not by the AG, not by the SEC, but by lowly Finra - for "Failing to Prevent Trade-Throughs in its Alternative Trading System."

In essence, what Goldman is said to have done is engage in the same latency arbitrage gimmicks that Michael Lewis and so many others have accused the "fair and efficient" US equity markets of doing for years. From Finra:

The Order Protection Rule generally requires that trading centers trade at the best-quoted prices or route orders to the trading centers quoting the best prices. FINRA found that from July 29, 2011, through August 9, 2011, there were more than 395,000 transactions executed in SIGMA-X where the execution traded through a protected quotation at a price inferior to the National Best Bid and Offer (NBBO).


During the eight-day trading period, Goldman Sachs was unaware that it was trading through a protected quotation in these instances. The trade-throughs were caused by market data latencies at SIGMA-X and were undetected in a timely manner.  [oh they were detected all right - they were also quite intentional but FINRA here is desperately trying to make Goldman appear cleaner than a) it was and b) Barclays] FINRA found that from November 2008 through August 2011, Goldman Sachs failed to establish, maintain, and enforce written policies and procedures that were reasonably designed to prevent trade-throughs of protected quotations in NMS stocks; and failed to regularly surveil to ascertain the effectiveness of its policies and procedures designed to prevent trade-throughs of protected quotations in NMS stocks.

The impact: "In connection with the approximately 395,000 trade-throughs, Goldman Sachs returned $1.67 million to disadvantaged customers."

The punchline, or rather, the "fine": $800,000. Also known as a few seconds of revenue for the bank which just like Virtu has at best 1 or 2 days of trading losses per quarter.

Oh, and this:

In settling this matter, Goldman Sachs neither admitted nor denied the charges, but consented to the entry of FINRA's findings

Becasue the rigged show must go on.

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Dr. Engali's picture

Let's be clear. The only people FINRA 'regulates'are guys like me. If we don't dot our I's and cross our T's it's serious trouble. For firms like the squid it's hookers and blow for everybody.

NotApplicable's picture

Anybody want to take a stab at interpreting this gem...

"were undetected in a timely manner"

*Head asplodes*

In other news, I bet I can undetect infinity in an instant.

knukles's picture

No more town cars for unpaid intern's personal weekend outings!

Manthong's picture

‘tis but a flesh wound, but just a tad more serious than any of John Kerry’s Purple Heart paper cuts.

Titus's picture

yep, and for that oversight goldman is transferring 6 months supply of toilet paper from blankfeins private bathroom.

they might as well have asked for discarded toenail clippings.

Son of Loki's picture

$800k of shareholder money... that's one night out on the town for these GS execs.

mr66's picture

FINRA exists to badger the broker who moves 100 shares of stock

Agent P's picture

"Betty, the man from FINRA is here, could you please bring the petty cash envelope up to the front desk?" 

Theosebes Goodfellow's picture

FINRA: "Your fine, Goldman Sachs, is $800,000 dollars."

GS: $800,000? $800,000!?! HAHAHAHAHAHAHAHAHAHAHA!!!!!!!!!!!

Dr. Engali's picture

$800,000 Lol. The fuckers steal more than that from a muppet in the time it takes to fart.

NoDebt's picture

If this is all that happens to them, maybe selling their Dark Pool last month was a bit of over-reaction on their part.

e_goldstein's picture

I'm betting there is a direct correlation between how long said muppet has had his account with the Squid and how long it takes him to fart. 

The longer, the quicker.

Cognitive Dissonance's picture

"It's just da cost of doing bidness." - Tony Soprano

Amish Hacker's picture

The Special today in the FINRA cafeteria is broken leg of lamb. I suggest you try some.

booboo's picture

That's about what uncle Loydd spends on ball gags, whips and "missing children" per year

TabakLover's picture

Walking around money for Blankfien

kurt's picture


Blank fien d


Yen Cross's picture

     If this isn't an incentive for banksters to ram a pole up your ass, I don't know what is!

astoriajoe's picture

FINRA: kickin' ass and takin' names.

ToNYC's picture

FINRA only prevents individual humans, in this case they were Dudley ordered to cross the line to keep Goldie's skirt cleaner than Tide delivers.

Notsobadwlad's picture

Classic.... are they so stupid or ignorant of the world to believe that this means anything, that it will restore confidence in the financial sham or government policing. Goldman and the rest have made their entire business model to be based on ensuring through fraud and deceit that people are ALWAYS at a disadvantage. They would not or could not exist in their current state any other way.

This will do nothing to bring people back to the markets or to give confidence in the lapdog regulators or even a tinge of belief that Goldman and the rest are being controlled or chastized.

Let's all quote Hillary: "What does it matter?"

Sudden Debt's picture

dang... next fridays evening company happyhour will need to be cancelled for once...


LawsofPhysics's picture

Wow, apparently the cost of doing business for criminal bankers is actually getting cheaper.  Oh no more "deflation"!!!



sdmjake's picture

Yeah that is ridiculous. 395,000 incidents. (Incidents that are devious enough to warrant a fine) A whopping $2.03 fine per incident.

The only message being sent here: Crime Pays

deus x machina's picture

big deal 800k,  they stole TRILLIONS with their fraud.

Iwanttoknow's picture

Sorry for thread hijacking.there is some rumor of a reset on 07/20/2014,based on a speech given by Christine Legard.What protective measures can one take if one is an average joe blow?

IridiumRebel's picture

Depends on the reset. If you have been slowly preparing as most here have you will fare better than others. I'd say get to stacking while AU is sub 1400, get protective in your portfolio and read up on tangible goods and useful knowledge like gardening...but its prolly too late for most of this unless you go all hands on deck. 

Iwanttoknow's picture

Many thanks.Much appreciated.

astoriajoe's picture

Just for 'fun' we could start a pool, picking some identifiable collapse-type event and having people choose the day they think it will occur.

Not sure what event it should be though. New currency announced?

IridiumRebel's picture

$800,000!!!!!!!!! Holy Shit how will they ever pay that? That would be like me trashing a neighbor's car and being fined 2 bucks....I'd have to cut back on a coffee or something. 

WOW! I hope this doesn't wreck them.

RaceToTheBottom's picture

Yep, cut back on the budget for one WS intern....  Oh the horror.

jmcadg's picture

Who'd have thunk GS changed their strategy for 8 days.
Aside that they're squeaky clean. Squeaky clean I say.

jmcadg's picture

BNP must be happy about this one!

starman's picture

That's a missprint , am I right? It's really 800mill.

vyeung's picture

oh my god, GS fined "$800,000", thats such a HUGE FINE. Its pathetic.

Like fining me "$100" bucks for rape, pillage and arson. I'll keep doing it as its cheaper than paying for a prostitution or working a honest living. Dame these shitty so called regulators really know how to do their job. All farking corrupt to the core.

disabledvet's picture

"Psycho Incorproated."

Too Scary to Fail.

jmcadg's picture

Hey frogs, it's a small club and you ain't fuckin' in it, bwahahahaha.

Hint to BNP, time to take down the opposition, or they'll take you.

JohninMK's picture

Its a good thing for GS that they are not British or French. There would have been at least another 0 or 00 at the end of the fine if they were.

Talk about fair justice.

replaceme's picture

I plan on making a killing by buying Goldman on the dip that this will create - I bet it's down 20-30% on this kind of news.  800K.  Seriously, what is that in escorts, a month?  Will some of the lower level execs stop getting out of work ballerinas and have to switch to recently retired ballerinas and (gasP) 30 year old lingerie models?  Please say no, there are laws to stop this kind of persecution. 

pupdog1's picture

That's lunch money for Goldman. If that.

Yeah. Our investment accounts are safe because they are backed by the fucking whores at FINRA.

orangegeek's picture

Enough for a few rails and some hookers for the folks at FINRA

Colonel Klink's picture

A WHOLE $800,000?  Lloyd Blankfiend drops more than that on hookers and blow in a month.

BeetleBailey's picture

FUCK the fines


firstdivision's picture

Ladies and gentlemen, justice has been served.  Now move along please.

Dewey Cheatum Howe's picture

Did anyone see the wrist bend any as it was slapped?

Mi Naem's picture


Sheeeeeut, dat ain't even lunch money!