Goldman Fined $110 Million For "Improperly" Rigging The FX Market

First Deutsche, then BNP, and now it's Goldman's turn to pay the Fed a token fee for making billions in manipulating the FX market from 2008 to 2013.

The Department of Financial Service announced on Tuesday that Goldman had agreed to pay the Federal Reserve $54.75 million, and an identical fine to the New York financial regulator, to settle claims that the bank allowed its foreign exchange traders to wrongly share customer information with traders from other global banks and engage in questionable conduct.

Furthermore, it appears that Goldman was the latest bank to participate in infamous FX rigging "chatoorms" which its traders used to discuss their positions on currency trades away from regulatory scrutiny.

The violation announced today stems from an investigation by DFS determining that from 2008 to early 2013, Goldman engaged in unlawful, unsafe and unsound conduct by failing to implement effective controls over its foreign exchange business.

Oddly enough, these years roughly coincide with Tom Stolper's reign as Goldman's undisputed "FX Gartman" when it comes to trading recommendations as regular readers will recall

"The firm failed to detect and address its traders' use of electronic chatrooms to communicate with competitors about trading positions," the Fed said in a statement. The Fed said it was taking the action with the New York Department of Financial Services (NYDFS). Separately on Tuesday, Bloomberg reported that Goldman agreed to match the Fed's fine to resolve the same allegations.

Having been caught manipulating the FX market, Goldman promised to do better and will "enhance internal controls and risk management" under the consent order. Translation: the rigging will continue, only this time no more chat rooms.

Full DFS press release below:

DFS FINES GOLDMAN SACHS $54.75 MILLION FOR UNSAFE AND UNSOUND CONDUCT IN ITS FOREIGN EXCHANGE TRADING BUSINESS

  • Goldman Traders Improperly Shared Customer Information with Traders from Other Global Banks and Engaged in Questionable Conduct to Improperly Affect Foreign Exchange Prices
  • Goldman Also Failed to Implement Effective Controls Over Its Foreign Exchange Business
  • The Bank Will Submit to DFS Plans for Enhanced Internal Controls and Risk Management

Financial Services Superintendent Maria T. Vullo today announced that Goldman Sachs Group Inc., parent company of Goldman Sachs Bank USA, agreed to pay a $54,750,000 fine as part of a consent order with the New York State Department of Financial Services (DFS) for violating New York banking law, including improperly sharing customer information with other global banks, and other unlawful conduct that disadvantaged customers and potentially affected foreign exchange prices.  The violation announced today stems from an investigation by DFS determining that from 2008 to early 2013, Goldman engaged in unlawful, unsafe and unsound conduct by failing to implement effective controls over its foreign exchange business.  As part of the consent order, Goldman will submit to DFS written plans for enhanced internal controls and compliance risk management. DFS coordinated its enforcement action with the Federal Reserve Board and appreciates the Board’s cooperation.

“DFS’s investigation revealed that Certain Goldman traders exploited the company’s ineffective oversight of its foreign exchange business by improperly sharing customer information, which allowed the bank’s foreign exchange traders and others to violate New York State law over the course of several years,” said Superintendent Vullo.  “DFS recognizes the steps taken by the company to ensure compliance with applicable laws, in entering into today’s consent order and to the agreed reforms.”

The DFS investigation found that from 2008 to early 2013, Goldman foreign exchange traders participated in multi-party electronic chat rooms, where traders, sometimes using code names to discreetly share confidential customer information, discussed potentially coordinating trading activity and other efforts that could improperly affect currency prices or disadvantage customers.  This improper activity sought to enable banks and the involved traders to achieve higher profits from execution of foreign exchange trades, sometimes at customers’ expense.

The traders engaged in this improper activity despite both outside guidance and internal policies designed to prevent improper trading practices.  For example, Goldman Sachs had specific policies addressing its foreign exchange business in place as early as 2001, and which evolved over time.  However, escalation of compliance concerns did not always occur as required, allowing potentially improper trading activity to continue.

Although a senior member of Goldman Sachs’ Global Foreign Exchange Sales Division raised concerns about the sharing of customer information, there is no evidence the supervisor took any steps to escalate to Goldman Sachs’ compliance function any of these serious concerns.

Under the consent order, Goldman will submit to DFS:

  • An enhanced written internal controls and compliance program acceptable to the Department to comply with applicable New York State and federal laws and regulations with respect to the bank’s foreign exchange trading business as it affects or pertains to the Bank or New York customers;
  • A written plan acceptable to the Department to improve the bank’s compliance risk management program with regard to compliance by the bank with applicable New York and federal laws and regulations with respect to its foreign exchange business as it affects or pertains to the bank or New York customers; and
  • An enhanced written internal audit program acceptable to the Department with respect to the Bank’s compliance with applicable New York and federal laws and regulations, as well as the Bank’s internal policies and procedures, in its foreign exchange trading business as it affects or pertains to the bank or New York customers.

Comments

Cognitive Dissonance BaBaBouy Tue, 05/01/2018 - 12:35 Permalink

So now we know there's a proper, and improper, way to rig the market.

Always good to know.

The traders engaged in this improper activity despite both outside guidance and internal policies designed to prevent improper trading practices.  For example, Goldman Sachs had specific policies addressing its foreign exchange business in place as early as 2001, and which evolved over time.  However, escalation of compliance concerns did not always occur as required, allowing potentially improper trading activity to continue.

Always the rouge trader and never with the willing agreement of management. If there was anything wrong done by the company, it was because of incompetence, not malicious activity.

In reply to by BaBaBouy

J S Bach toady Tue, 05/01/2018 - 12:41 Permalink

This always cracks me up. The (((predator banks))) get fined for $100 million, then not only get to stay in business, but KEEP the other billions that they swindled. Ain’t modern America grand?

In reply to by toady

Mr. Universe blindfaith Tue, 05/01/2018 - 14:01 Permalink

Interestingly enough if you say anything truthful about the cult of Islam or point out the factual errors of the holocaust you will be put in jail in several countries. Oh and don't come whining to the authorities that your daughter got gang raped by a bunch of third world scum. It turns out these 24 year old "children" didn't understand the meaning of the word no, so it's your daughters fault, case closed.

Here is the second part of our famous elder statesmen's quote...

Clinton said, "It depends upon what the meaning of the word 'no' is.

In reply to by blindfaith

Expendable Container Mr. Universe Tue, 05/01/2018 - 17:23 Permalink

True. They put little old ladies like Ursula Haverbeck and Monika Schaefer in German jails for discovering, through research, and speaking out that the holocaust official narrative is unsustainable (eg ZYKLON B -cyanide gas- stains blue through the walls permanently through continual use, and Auschwitz ca$h chamber$ have NO prussian blue impregnation. Why not? JAIL!

Yet the small clothes de-lousing chambers to prevent the dreaded killer illness TYPHUS DO have prussian blue wall stains in Auschwitz. Conclusion: Zyklon B was used to SAVE inmates lives, not to gas them. This was a labor camp not death camp as the war propaganda to demonize the 'enemy' stated.

After all, it had a swimming pool, theatre, orchestras, brothel (now a nunnery ironically), soccer field, shop, camp money (yes they got a small payment to work), hospital, Maternity Ward - 3,000 babies were born there and ALL survived. Weddings took place there. Children's day centre too. The goyim know!

What we are NOT told is that AFTER WWII 1.2 MILLION German POWs were starved to death out in the open on the direct orders of mass murderer Germanophobic EISENHOWER. This is on the record.

 

In reply to by Mr. Universe

any_mouse J S Bach Tue, 05/01/2018 - 14:40 Permalink

100 mill, probably the net off of one intraday trade, right?

The proper way to manipulate is to not leave tracks.

Too bad, the SEC doesn't have the same lust for manipulators as the FBI and DOJ had for Trump and Russians.

More like the extent of Obama's DOJ and FBI's concern for Hillary's whoopsies.

In reply to by J S Bach

101 years and … JRobby Tue, 05/01/2018 - 13:40 Permalink

best ponzi ever:

fed prints money

fed gives money to GS for treasuries

Fed receives interest payments from US Treasury for those treasuries

Fed then pays interest on the "excess reserves" GS 

Fed remits whatever money it has left to UST, essentially meaning US taxpayers pay the interest to GS for literally sitting on money that was created out of thin air.

 

In reply to by JRobby

BrigstockBoy Tue, 05/01/2018 - 12:38 Permalink

As if a fine that size is a deterrent to the vampire squid. JPM has been fined tens of billions and is still a bad actor. Ask Jamie Dimon to surrender his presidential cufflinks... now there's a civil penalty.

Easyp Tue, 05/01/2018 - 12:46 Permalink

Buy Gold that's not a rigged market....no really.....or silver.....

 

Would Traders "engage in questionable conduct" if they might end up getting raped every night in a big nasty jail?

Sudden Debt Tue, 05/01/2018 - 13:10 Permalink

GDPRS laws in Europe would allow all the customers of Goldman Sachs to demand 4% of their anual turnover!

 

just saying :)

 

SUE THOSE MOTHERFUCKERS IF YOU'RE EUROPEAN AND A CUSTOMER!!!

 

not so in America where they don't give a rats ass about privacy laws.

Jesus von Einstein Tue, 05/01/2018 - 13:11 Permalink

If the Fed can fine a bank, it must have state power, it must be part of the government.

So why does its constituent banks have private owners, and why can they refuse FOIA requests to re private, not government entities?

crazybob369 Tue, 05/01/2018 - 13:11 Permalink

Goldman Fined $110 Million For "Improperly" Rigging The FX Market

 

I assume, therefore, that had they properly rigged it, there would have been no fine.