The U.S. Commodity Futures Trading Commission (CFTC) has fined Goldman Sachs $1m for failing to make and keep certain audio recordings as needed for compliance under swap dealer regulations.
In addition to the financial penalty, the bank has been issued a cease and desist from further violations of Commission regulations.
It was also noted that the failure of Goldman Sachs impeded an unrelated investigation conducted by the Division of Enforcement.
The order finds Goldman began using recording hardware on its phone lines of trading and sales desks in March 2013. This was done to meet recordkeeping obligations as a swap dealer.
In 2014, after installing a software security patch in one of the bank’s offices, the recording hardware was restarted prematurely, which resulted in a failure to record audio.
The bank was then unaware of the error for around three weeks and only came across the issue when conducting an unrelated spot-check of the office’s recording system. It quickly re-established the recording system.
Later, the Division of Enforcement undertook an investigation into the affected Goldman Sachs office for an unrelated inquiry. It requested audio recordings for dates within the period of the recording failure, which Goldman Sachs could not supply.
The Division of Enforcement was only alerted of the bank’s failure to maintain recordings because of the incident. Due to the failure of Goldman Sachs, the investigation the Division of Enforcement had been conducting was impeded as it could not obtain information which should have been captured.
CFTC enforcement director James McDonald said, “Registrants must comply with the Commission’s recordkeeping requirements, as with all other applicable laws.
“When they do not, we are committed to holding them accountable. This action reinforces the critical importance of recordkeeping requirements to the CFTC’s enforcement mission.”
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