Finra fines Goldman Sachs $3 million for mislabeling sell orders

abdelaziz Fathi

The Financial Industry Regulatory Authority continues to take disciplinary actions against financial services firms for providing inaccurate securities trading information.

Today, the industry’s self-regulatory authority ordered Goldman Sachs to pay a fine of $3 million for various reporting lapses over a period of at least three years.

FINRA said Goldman Sachs was fined for mislabeling nearly 60 million short sell orders as long and related supervision failures. From October 2015 to April 2018, the company mismarked orders totaling more than 14 billion shares, which impacted market data and potentially led to financial losses for investors. This in turn led to the incorrect marking of Goldman Sachs’ customer transactions for at least 30 months.

During this period, the company executed nearly eight million of those orders, totaling more than a billion shares. Due to the inaccurate “long” mark, 12,335 of the executed orders were filled at or below the best bid. Further, the company violated some rules which impose a circuit breaker on short sales that when triggered, and permits short selling only at a price above the current national best bid.

These mismarked orders also caused the firm to submit inaccurate trade reports to FINRA and maintain inaccurate books and records. Separately, Goldman misapplied the order marking logic to sell orders routed by a foreign affiliate, which labelled those orders inaccurately as short.

The U.S. regulator said during the period of review that Goldman Sachs did not have adequate systems and controls in place to detect and prevent the violations. In addition, FINRA’s latest fine was stipulated on repeated failures in accurately submitting required trade reports to the appropriate FINRA Trade Reporting Facility (TRF).

“From October 2015 to April 2018, Goldman mismarked 59,981,252 short sell orders as long, of which 26,944,700 were sent to an alternative trading system (ATS). These orders represented less than one percent of Goldman’s total principal sell orders during this time period. The orders were auto-generated to promptly hedge the Synthetic Product Group’s (SPG) synthetic risk exposure resulting from its execution of equity swap transactions with clients. The mismarked orders were caused by Goldman’s implementation of an upgrade to the relevant automated trading software that was intended to simplify this order flow,” the statement reads.

Goldman Sachs consented to Finra’s order without admitting or denying the findings. In addition to paying the penalty, the company agreed to be censured and must cease and desist from further violations.

Read this next

Digital Assets shuts down its US institutional exchange has announced plans to discontinue its institutional exchange service for professional customers in the United States as soon as June 21.

Retail FX

ThinkMarkets launches copy trading platform ‘ThinkCopy’

Melbourne-based broker, ThinkMarkets has introduced ThinkCopy, a copy trading platform that aims to provide clients with access to experienced traders and a range of social features.

Retail FX

Robinhood delists Solana, Cardano, and Polygon amid SEC’s crackdown

Commission-free brokerage Robinhood Markets announced on Friday that it would be delisting three crypto tokens from its platform. The decision comes shortly after the U.S. regulators intensified its regulatory actions against major cryptocurrency exchanges.

Digital Assets

US wants Bittrex to settle federal dues before compensating customers

The U.S. government has raised objections to Bittrex’s proposal to compensate its customers, adding to concerns about the resolution of the crypto exchange’s bankruptcy case.

Digital Assets

Binance prepares to suspend US dollar funding after SEC crackdown

Binance.US said it will temporarily suspend US dollar deposits and provided customers with a deadline to withdraw their fiat balances. This decision comes after the US Securities and Exchange Commission (SEC) filed a lawsuit requesting the freezing of Binance’s assets in the country.

Digital Assets

Januar launches real-time payments network to fill gap made by Silvergate and Signature

“To all the entrepreneurs and innovators out there is a clear message: if you are a legitimate European business working with crypto then Januar is here to provide you with the account and payment infrastructure you need to operate successfully and build the financial system of tomorrow.”

Retail FX

Exness’ active clients top 515K as monthly volume hits $3.35 trillion

FX trading volumes are climbing again as economic uncertainty spurred by recent developments over central banks’ policies encouraged speculators to pile back into the market.


Danske Bank plans signficant investment in digital platforms

“We have decided to significantly increase our investments in our digital platforms, expert advisory services and sustainability, focusing on the areas where we see the best opportunities for profitable growth.”

Digital Assets

ERD DeFi Lending Platform and USDE Stablecoin Unveiled at EDCON 2023

ERD, the Ethereum Reserve Dollar, is a decentralized lending platform and stablecoin that aims to provide a capital-efficient, decentralized, and stable solution to the challenges faced by the stablecoin industry, introducing a minimum collateralization ratio of 110% and a robust liquidation mechanism.