The US regulatory agency said that due to inadequate policies and procedures, the firm’s analysts could share material, nonpublic information about upcoming research changes.
SEC accused the firm saying that although increased high risk, Goldman failed to establish adequate policies or adequately enforce and maintain its existing policies to prevent the misuse of material, nonpublic information about upcoming changes to its research.
The Securities and Exchange Commission Enforcement Division director Robert Khuzami said that higher-risk trading and business strategies require higher-order controls.
"Despite being on notice from the SEC about the importance of such controls, Goldman failed to implement policies and procedures that adequately controlled the risk that research analysts could preview upcoming ratings changes with select traders and clients," Khuzami said.
During the course of probe, SEC noticed that from 2006 to 2011, Goldman organised weekly huddles in which analysts discussed their top short-term trading ideas and traders discussed their views on the markets.
The firm has also confirmed that it will censure review and revise its written policies and procedures to correct the deficiencies rose by the SEC.
Goldman utilizes a stock research methodology ‘Huddles’ and provides their best trading ideas to firm traders and later passed them on to a select group of top clients.
Having started the Asymmetric Service Initiative (ASI) program in 2007, Goldman analysts shared information and trading ideas from the huddles with select group of clients.
