Press Association
Sunday 12th February 2012
Banking giant Goldman Sachs has been fined £17.5 million by the UK's Financial Services Authority - the second biggest penalty ever issued by the City watchdog.
The American investment group was punished for failing to tell the FSA that one of its traders was under investigation when he took up a job at the bank's London office in 2008.
Fabrice Tourre was at the centre of claims that the bank misled buyers of complex mortgage-backed investments in 2007, when the US housing market bubble was bursting.
The FSA began its investigation in April after the US Securities and Exchange Commission (SEC) charged Goldman over its Abacus debt product - part set up by Tourre.
The bank settled the fraud charge in mid-July by agreeing to pay £356 million (550 million US dollars) - the largest fine in the SEC's history. Tourre denied any wrongdoing.
But in November 2008, while under investigation, Tourre transferred to London to become executive director of Goldman Sachs International (GSI) - which meant he became an FSA-approved person.
The FSA said Goldman Sachs was required to have systems in place to ensure information surrounding the SEC investigation was shared between its US and UK offices.
But the UK regulator said GSI did not deliberately withhold information, and as it co-operated fully and agreed to settle at an early stage, it qualified for a 30% discount. Without the discount the fine would have been £25 million.
Margaret Cole, managing director of enforcement and financial crime, said: "We have repeatedly stressed the importance of firms self-reporting regulatory issues to the FSA in a timely way. GSI did not set out to hide anything, but its defective systems and controls meant that the level and quality of itscommunications with the FSA fell far below what we expect of an authorised firm."
Commenting on the fine, a Goldman Sachs spokesman said: "We are pleased the matter is resolved." The investment bank said French-born Tourre remains a Goldman employee, but is currently on paid leave.
