Goldman Sachs fined $800,000 over violations in dark pool pricing
City Index July 2, 2014 10:15 PM
<p>Goldman Sachs has been fined $800,000 (£466,000) for failing to ensure that trades in its dark pool took place at the best price.</p>
The US regulator has given Goldman Sachs an $800,000 (£466,000) fine for failing to ensure that trades in its dark pool took place at the best price, which led to nearly 400,000 mispriced trades.
During an eight-day period in 2011, trades executed in the Sigma X dark pool traded at a price inferior to the best bid in the markets at the time, the Financial Industry Regulatory Authority said, adding that the investment banking firm was "unaware" of the issue at the time.
It has stated the company "failed to establish, maintain, and enforce written policies and procedures that were reasonably designed" to prevent trades from being executed at inferior prices.
Dark pools are trading operations which allow clients to trade large blocks of shares while keeping prices private.
Goldman did not admit the allegations
Under US regulations, dark pools and public exchanges are required to give investors the best price available, regardless of where trades are executed.
As part of its settlement, Goldman did not admit or deny the allegations.
The firm has already paid almost $1.67 million to affected clients to compensate them for the trades, the BBC reports.
Goldman Sachs Group was up 0.24 per cent to 167.2100 at 10.44 ET today (July 2nd) in New York.
Meanwhile, the Dow industrials index flirted with the 17,000 milestone and the S&P 500 less than 1.5 per cent from hitting 2,000.
This follows yesterday's jump by US shares in response to strong figures for US auto sales and new data showing Chinese manufacturing activity picking up, with HSBC's final read on the manufacturing Purchasing Managers' Index displaying its first improvement this year.
The Dow climbed 0.77 per cent and the S&P 500 added 0.67 per cent, while the Nasdaq surged 1.14 per cent.
Find up to date information on the FTSE 100 and spread betting strategies at City Index.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.