Goldman hit with £17.5m fine from FSA

first_img GOLDMAN SACHS has been slapped with a £17.5m fine for failing to tell the City regulator about a US investigation into Fabrice Tourre, the trader at the heart of a derivatives scandal.The Financial Services Authority (FSA) criticised the Wall Street titan for a breakdown in internal communication that meant Goldman’s American branch did not warn its UK office of the Securities and Exchange Commission (SEC) probe into Tourre’s role putting together a mortgage-backed security called Abacus. In turn, the UK division did not inform the watchdog. Tourre moved from New York to London midway through the SEC’s inquiry.The SEC accused Goldman of defrauding investors in Abacus by allowing John Paulson, a hedge fund manager, to help design its portfolio while planning to sell it short. Buyers including German bank IKB lost an estimated $1bn (£648m) when Abacus’ property loans turned toxic.Goldman settled the case for $550m in July, although Tourre denied any wrongdoing.Yesterday, the FSA said it did not find out Tourre had been served with a Wells Notice – which signifies US authorities’ intention to prosecute – until the SEC went public with its charges in April. The regulator chastised Goldman for “weaknesses” in its compliance routine.Enforcement director Margaret Cole said: “Goldman Sachs did not set out to hide anything, but its defective systems and controls meant the level and quality of its communications with the FSA fell far below what we expect of an authorised firm.”A Goldman spokesperson said: “We are pleased the matter is resolved.”The strength of the penalty, the second-largest the FSA has issued, was designed to embarrass the controversial investment bank. But analysts said it would have little impact on Goldman’s image in the UK.Stefano Harney, professor of strategy at Queen Mary, University of London, said: “This won’t do much damage. Just as Goldman’s huge bonus pools perversely enhance their reputation, judgements against them prove they’re at the cutting edge.”Shares in Goldman closed 1.1 per cent up at $149.14 in New York. Thursday 9 September 2010 8:42 pm KCS-content Show Comments ▼ whatsapp whatsapp Goldman hit with £17.5m fine from FSA Share Tags: NULL by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeTotal PastThe Ingenious Reason There Are No Mosquitoes At Disney WorldTotal PastNoteabley25 Funny Notes Written By StrangersNoteableyMoneyPailShe Was A Star, Now She Works In ScottsdaleMoneyPailSerendipity TimesInside Coco Chanel’s Eerily Abandoned Mansion Frozen In TimeSerendipity TimesBetterBe20 Stunning Female AthletesBetterBemoneycougar.comThis Proves The Osmonds Weren’t So Innocentmoneycougar.comElite HeraldExperts Discover Girl Born From Two Different SpeciesElite Heraldautooverload.comDeclassified Vietnam War Photos The Public Wasn’t Meant To Seeautooverload.comZen HeraldThe Truth About Why ’40s Actor John Wayne Didn’t Serve In WWII Has Come To LightZen Herald last_img read more