The Goldman Sachs Group, Inc. (NYSE:GS) is currently under investigation for the fees it charges for futures trading, prompted by a whistle-blower tip. The news, initially reported by Bloomberg and sourced from individuals familiar with the matter, highlights the scrutiny facing the investment banking giant.
The Commodity Futures Trading Commission (“CFTC”) has reportedly authorized the issuance of warrants to Goldman Sachs, allowing for the collection of information regarding fees associated with certain futures block trades. Despite requests for comment, both Goldman Sachs and the CFTC have remained silent on the matter.
This isn’t the first time Goldman Sachs has faced regulatory scrutiny. In 2023, the company paid over $50 million in fines to the CFTC to resolve multiple cases. These included a $15 million settlement in April over allegations of inadequate disclosures and fair communication with swap customers. In August, the bank was hit with a $5.5 million civil penalty for violations of the Commodity Exchange Act and the CFTC’s record-keeping provisions.
The CFTC found that Goldman Sachs had breached a prior order and failed to adequately record and retain certain audio files. This pattern of non-compliance dates back to 2019 when the bank was fined $1 million for failure to record phone lines on its trading and sales desk. Despite this penalty, the bank continued to face issues with record-keeping, attributed to failures in both hardware and software systems.
Additionally, Goldman Sachs faced a $30 million penalty for inadequate supervision of its swap dealer activities and significant shortcomings in swap data reporting. Despite these regulatory challenges, the company’s shares have outperformed the industry, gaining 12.4% over the past six months compared to a 4% rally in the industry.
As the investigation unfolds, Goldman Sachs navigates a turbulent regulatory landscape, underscoring the importance of compliance and risk management in the financial industry.
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