Cboe fines Goldman Sachs for alleged rule violations
Goldman Sachs & Co, LLC has agreed to pay a fine in the amount of $125,000 as a part of a settlement with Cboe BZX Exchange.
From in or about October 2018 through on or about February 23, 2021, Goldman reported approximately 17,600 positions in approximately 23,500 instances with incorrect effective dates, due to a system logic issue impacting the firm’s LOPR reporting of certain “as-of” positions and the effective date on those positions when the Firm received multiple “as-of” positions in the same option series on the same day.
From on or about September 25, 2019 through on or about May 10, 2020, Goldman failed to report approximately 2,200 positions in a maximum of approximately 41,000 instances, due to a technology processing issue that impacted the transmission of option reference data in some symbols.
These acts, practices, and conduct constitute violations of Exchange Rule 18.10(a) by Goldman, in that the firm failed to report, or accurately report, certain of its reportable listed options positions to the LOPR.
From in or about October 2018 through on or about February 23, 2021, Goldman failed to establish, maintain, and enforce written supervisory procedures (WSPs) and supervisory systems that were reasonably designed to prevent and detect violations of the Firm’s LOPR reporting obligations. Specifically, the Firm failed to have reasonable WSPs, and supervisory review system conducted with respect to the reporting of effective dates.
Although the Firm was reviewing FINRA’s LOPR report cards on which the incorrect effective dates were populated as exceptions, the Firm’s review focused only on what it deemed to be outliers and anomalies with respect to the volume of exceptions and was not designed to identify its incorrect reporting of the effective dates.
These acts, practices and conduct constitute violations of Exchange Rule 5.1 by Goldman, in that the firm failed to establish, maintain, and enforce reasonably designed WSPs and supervisory systems that were reasonably designed to prevent and detect violations of the firm’s LOPR reporting obligations.
Goldman Sachs has relevant disciplinary history specifically relating to LOPR compliance. On July 17, 2017, the firm consented to a censure, a fine of $2,500,000, and an undertaking to correct supervisory deficiencies in connection with LOPR reporting violations and related supervisory failures between January 19, 2010 and July 7, 2016.
Specifically, the Cboe BZX settlement document noted that the Firm: (1) failed to report options positions held in 118 accounts of the Firm’s foreign affiliate in hundreds of thousands of instances to the LOPR; (2) inaccurately reported an unknown but significant number of options positions in an unknown number of instances by reporting options positions with invalid or missing address fields; and (3) inaccurately reported options positions with the wrong effective dates to the LOPR for approximately 25,500 positions in 25,500 instances, in violation of Cboe BZX Rule 18.10.
In light of the alleged rule violations described above, and the firm’s prior relevant disciplinary history, the firm consents to the imposition of a censure and a monetary fine in the amount of $125,000.