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CFTC orders Goldman Sachs to pay $5.5 million for violations involving audio recordings

On Behalf of | Sep 7, 2023 | Firm News

The Commodity Futures Trading Commission announced it is penalizing Goldman Sachs over recordkeeping violations and violating the cease-and-desist provision of a previous commission order, according to the Wall Street Journal.

The CFTC said Goldman Sachs has agreed to pay a civil fine of about $5.5 million to settle the allegations against it, which include a failure to properly record and retain certain audio files.

In describing the background of the case, the CFTC said that in 2019 Goldman Sachs had failed to record the phone lines of a trading and sales desk for 20 calendar days between January and February 2014, following a software patch which caused its recording hardware to malfunction.  The firm was ordered to pay a $1 million fine and to avoid further violations of CFTC recordkeeping provisions.  The new order announced last month found that Goldman Sachs has since had additional recordkeeping failures in violation of the cease-and-desist provision of the earlier order.  The bank was found to have used a vendor service to record calls made on mobile devices.

In addition, the CFTC determined that increased use of the vendor’s recording service during onset of the pandemic in March 2020 led to increased failures in the vendor’s hardware. As a result, Goldman failed to fully record and retain thousands of mobile device calls. Goldman discovered the issue when investigating reports of poor call quality from employees using the recording service. An interim fix was implemented in May 2020, and the vendor’s hardware was replaced with an alternative system in September 2020.

“As this case demonstrates, the CFTC will continuously pursue swap dealers that fail to meet their recording obligations and there will be consequences for violating CFTC orders, including increased penalties,” said Director of Enforcement Ian McGinley. “We are committed to holding swap dealers accountable when they fail to comply with their regulatory obligations and fail to abide by obligations imposed by prior CFTC orders.”

Along with the civil penalty, Goldman was ordered to cease and desist from further violations of the recordkeeping provisions of the Commodity Exchange Act and CFTC regulations, as charged.

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