09/09/2010

Goldman Sachs fined £17.5m by FSA

Goldman Sach’s £17.5m ($27m) fine by the FSA is another indication of the UK financial regulator’s willingness to crack down on firms that “bend the rules”, according to regulatory advisory group Kinetic Partners.

According to the FSA, today’s fine relates to Goldman’s failure to ensure that it had in place adequate systems and controls to enable it to comply with UK regulatory reporting obligations, following allegations of violations of US securities law and an United States Securities and Exchange Commission (SEC) investigation. 

This resulted in a failure to notify the FSA of matters relating to the SEC’s investigation into the Abacus 2007-AC1 synthetic collateralised debt obligation (Abacus).

“It is very much a question of jurisdictional responsibility that has been put under the spotlight,” said Andrew Shrimpton, former head of regulation at the FSA and now member, regulation at professional services firm Kinetic Partners. “It highlights how global companies can often overlook the requirement to inform the FSA of significant issues, especially if they are already being investigated by another regulatory body."

He continued: "Goldman Sachs did not immediately recognise their responsibility to report to the UK regulatory authority, as well as the SEC. The FSA have reacted by handing out a huge fine, demonstrating that a breach of regulation of this sort made by a US-based company, is just as consequential for the UK market.”