Cboe fines Goldman Sachs for violation of recordkeeping requirements
Cboe Exchange Inc has posted a notice of disciplinary action regarding Goldman Sachs.
Goldman has submitted Letter of Consent for the purpose of proposing a settlement of the alleged rule violations. The Firm neither admits nor denies that violations of Exchange Rules have been committed.
This matter originated from a 2019 examination of the Firm conducted by the Financial Industry Regulatory Authority’s (FINRA) Department of Market Regulation on behalf of Cboe and other options exchanges. The examination reviewed for, among other things, Goldman’s compliance with the recordkeeping requirements of Rule 17a-3 of the Securities Exchange Act of 1934, as amended and Cboe recordkeeping rules, as well as related supervision, from January 2017 to December 2020.
From January 2017 to December 2020, Goldman personnel responsible for reviewing options order tickets for orders manually received and entered by the relevant trading desks failed to verify that those tickets included the accurate recording of the time at which the orders were transmitted to options exchanges.
The firm had no automated system or exception reports reasonably designed to verify that traders and/or its order management system were accurately recording options order transmission times as required or that supervisors were appropriately reviewing the order tickets to detect instances when the transmission time was omitted or inaccurately recorded.
These acts, practices and conduct constitute violations of Cboe Rules 4.24 and 8.16 by Goldman, during their respective dates of applicability, in that Goldman failed to establish, maintain, and enforce a supervisory system reasonably designed to comply with the recordkeeping provisions of the federal securities laws and Cboe rules that require the accurate documentation of option order transmission times.
Cboe notes that the Firm does not have any prior relevant disciplinary history specifically related to its supervisory reviews of manual option order tickets.
In light of the alleged rule violations, the firm consents to the imposition of the following sanctions:
- A censure; and
- A monetary fine in the amount of $5,000.
The effective date of the disciplinary notice is April 14, 2022.