Kit Addleman in Law360: Regulators Fine Goldman $22M Over Trading Tip Favoritism


Goldman Sachs Group Inc. agreed Thursday to pay securities regulators $22 million to settle allegations that it lacked adequate controls to prevent its stock analysts from giving early tips to firm traders and preferred clients.

Between 2006 and 2011, Goldman held weekly so-called huddles in which research analysts gave their best stock tips to firm traders, opinions they later shared with a group of favored clients, according to the U.S. Securities and Exchange Commission. The discussions, the SEC contends, raised the risk that firm traders and preferred clients would learn about upcoming changes in Goldman's influential research reports.

Though it was warned by the SEC, Goldman never implemented adequate controls to make
sure that analysts did not give select traders early access to potentially market-moving
information, according to the agency ...

"The SEC is sending a strong message about protecting internal information from possible misuse and abuse," said Kit Addleman, a partner with Haynes and Boone LLP and former director of the SEC's Atlanta office. "It's something that will make other companies stand up and take notice."

Excerpted from a Law360 article appearing April 13, 2012. To read the full article, please click here (subscription required).

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