Goldman Sachs has been slapped with a $800,000 fine over charges of trading rules violations by its “dark pool” alternative trading venue.
The Financial Industry Regulatory Authority (FINRA) said Tuesday morning that Goldman (GS) has agreed to pay the fine, in addition to the $1.67 million the financial giant has already returned to customers who were harmed. The agreement settles the financial regulator’s charges that Goldman failed to install reasonable written policies and procedures to prevent trade-throughs of protected quotations in trades on its SIGMA-X dark pool, an exchange where bidders and sellers can make trades out of public view, between November 2008 and August 2011.
FINRA also said Goldman was not aware of pricing errors, where transactions were made at prices inferior to the national best bid and offer (NBBO), on its private trading venue during an eight-day trading period in the summer of 2011.
Thomas Gira, FINRA’s executive vice president of market regulation, said in a statement that it is important for financial houses to comply with SEC trade-through rules to protect customers.
“In today’s highly automated trading environment, FINRA has no tolerance for firms that fail to have robust policies and procedures to protect against trading through protected quotations,” Gira said.
The FINRA announcement notes that, as part of the settlement, “Goldman Sachs neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.”
Goldman is the latest major financial institution to run into trouble over the operation of its dark pool. British bank Barclays was recently hit with a securities fraud lawsuit by New York State Attorney General Eric Schneiderman over how the bank operates its own dark pool trading venue. That dark pool, called Barclays LX, is reportedly headed by David Johnsen, a former Goldman executive until he was let go two years ago, according to International Business Times.
