Goldman Sachs to pay USD1m CFTC penalty for record-keeping violations 


The US Commodity Futures Trading Commission has issued an order filing and simultaneously settling charges against Goldman Sachs & Co for failing to make and keep certain audio recordings as required under CFTC regulations for swap dealers. 

The order requires Goldman to pay a USD1,000,000 civil monetary penalty and to cease and desist from further violations of Commission regulations, as charged. The order also finds that Goldman’s failure impeded an unrelated investigation conducted by the Division of Enforcement (Division).

“Registrants must comply with the Commission’s record-keeping requirements, as with all other applicable laws,” says CFTC Enforcement Director James McDonald. “When they do not, we are committed to holding them accountable. This action reinforces the critical importance of record-keeping requirements to the CFTC’s enforcement mission.”

The order finds that Goldman, to comply with its record-keeping obligations as a swap dealer, began using recording hardware to record the phone lines of trading and sales desks in March 2013. In January 2014, after the installation of a software security patch in one of Goldman’s offices, the recording hardware in that office restarted prematurely and, as a result, failed to record audio. Goldman was unaware of the error for approximately three weeks, until it conducted an unrelated spot-check of the affected office’s recording system, at which point Goldman identified the failure and re-engaged the recording system. 

The Division subsequently opened an unrelated investigation that concerned the affected office and requested that Goldman produce certain audio recordings for dates within the period of the recording failure. Because of the recording failure, Goldman was unable to produce a significant number of the requested recordings. The Division only learned of Goldman’s failure to keep and maintain the recordings when Goldman informed the Division it was unable to produce them in the context of the Division’s unrelated investigation. Goldman’s record-keeping failure impeded that investigation, because the Division was unable to obtain the information that should have been captured in the missing recordings through any other means.

The Division staff members responsible for this case are Gabriella Geanuleas, Brandon Wozniak, Christopher Giglio, Kathryn Sandstrom, David W MacGregor, Lenel Hickson, Jr, and Manal M Sultan.

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