The bank has been fined by the US Commodities and Futures Trading Commission (CFT) for recordkeeping violations, including failure to meet an existing order from the regulator, as the CFTC vows to take further action against non-compliance.
The CFTC order simultaneously files and settles against Goldman Sachs, requiring the bank to pay a $5.5 million civil monetary penalty and to cease and desist from further violations of the recordkeeping provisions.
“The CFTC will continuously pursue swap dealers that fail to meet their recording obligations and there will be consequences for violating CFTC orders, including increased penalties,” stressed director of enforcement Ian McGinley. “We are committed to holding swap dealers accountable when they fail to comply with their regulatory obligations and fail to abide by obligations imposed by prior CFTC orders.”
The penalty stems from a November 2019 order in which the CFTC found that Goldman failed to record the phone lines of a trading and sales desk for 20 calendar days in January and February 2014, after its recording hardware malfunctioned following a software patch. The regulator ordered Goldman to pay a US$1m civil monetary penalty and to cease and desist from further violations of CFTC recordkeeping provisions. The latest fine is due to violation of this order, in addition to further recordkeeping failures, specifically that the bank used a vendor service to record calls made on mobile devices, the hardware for which failed during the Covid pandemic due to increased use, leading to a failure to record thousands of mobile phone calls – an issue that was not fixed until March 2020, when the vendor was replaced. A separate software failure related to a hard-wired trading turret led to a further failure to record audio, a situation that was not rectified until June 2022.
“Another day, another recordkeeping related fine for a major bank,” said Oliver Blower, CEO of VoxSmart.
“The CFTC is very clear and consistent – firms need to be able to accurately reconstruct swap trades within 72 hours, at any time of calling. The fact that banks are consistently receiving these fines demonstrates the difficulty in reconstructing swap trades, which is reliant on harmonising vast swathes of trade and comms data. One thing is for certain, it is a lot easier if you aren’t relying on antiquated manual processes to meet your regulatory requirements.”
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