(The Herald Post) – Goldman Sachs & Co’s unit has reached a settlement with the U.S. Commodity Futures Trading Commission (CFTC), agreeing to pay $15 million to resolve charges of improper disclosures and communication with swap customers.
The regulator made the announcement on Monday, shedding light on the bank’s practices during 2015 and 2016.
During that time, Goldman Sachs reportedly sold “same-day” swaps to clients at times that were financially advantageous for the bank but detrimental to the customers.
The CFTC’s settled order reveals that the bank admitted to failing to disclose essential information for the majority of these transactions.
According to the CFTC, Goldman Sachs capitalized on opportunities to buy or sell swaps when they were trading at a premium or discount to the projected settlement prices of certain equity indexes. The bank withheld crucial marks from customers, preventing them from accurately assessing the swap’s value. Furthermore, the firm did not communicate with clients in a fair and balanced manner.
By obscuring the relative value of the swaps offered, Goldman Sachs violated the CFTC’s business conduct standards for swap dealers.
In response to the settlement, enforcement director Ian McGinley emphasized the CFTC’s commitment to pursuing swap dealers that breach these standards, which aim to promote fairness in the swaps market.