Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Friday, March 29, 2024 | Back issues
Courthouse News Service Courthouse News Service

Goldman Sachs Saddled With $109M Fine in Forex Probe

Risky practices in its foreign exchange business will cost Goldman Sachs more than $109 million after regulators fined the bank Tuesday.

WASHINGTON (CN) - Risky practices in its foreign exchange business will cost Goldman Sachs more than $109 million after regulators fined the bank Tuesday.

To resolve the investigations, which cover the firm's activities from 2008 to 2013, Goldman Sachs agreed to pay $54.75 million each to the Federal Reserve and the New York state Department of Financial Services.

"We are pleased to have resolved the Federal Reserve Board's and New York Department of Financial Services' respective reviews and appreciate their recognition that we have already taken significant steps to enhance our policies and procedures," Goldman Sachs spokeswoman Megan Riley said in a statement.

During their investigations, the Federal Reserve and the New York State Department of Financial Services found that employees at the bank who dealt in the foreign-exchange market frequented chat rooms with other traders, where they passed along confidential information about their customers.

According to the firm's consent order with the New York State Department of Financial Services, the traders used code names to discuss their clients, with one employee referring to his client as "Satan" and passing along information about his trading habits to other traders.

In addition, traders discussed their trading activity in the chats, which could have artificially altered the prices of the currencies they were buying and selling, according to a consent decree with the New York regulator.

Along with the fines, Goldman Sachs will also need to put in place new internal controls and risk management practices, though the New York State Department of Financial Services said in a statement the firm has already taken some steps to improve its compliance.

"DFS's investigation revealed that certain Goldman traders exploited the company's ineffective oversight of its foreign exchange business by improperly sharing customer information, which allowed the bank's foreign exchange traders and others to violate New York State law over the course of several years," Financial Services Superintendent Maria Vullo said in a statement. "DFS recognizes the steps taken by the company to ensure compliance with applicable laws, in entering into today's consent order and to the agreed reforms."

In 2015, five large banks, including Citigroup and JP Morgan Chase, paid a total of $2.5 billion in fines after an investigation revealed their traders used chat rooms to manipulate rates on the foreign exchange markets.

Categories / Business, Financial, Government

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Loading...