{"id":84428,"date":"2023-04-11T01:30:21","date_gmt":"2023-04-11T05:30:21","guid":{"rendered":"https:\/\/www.hedgeco.net\/news\/?p=84428"},"modified":"2023-04-11T01:52:27","modified_gmt":"2023-04-11T05:52:27","slug":"cftc-orders-goldman-sachs-to-pay-15000000-for-violations-of-swap-business-conduct-standards","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/04\/2023\/cftc-orders-goldman-sachs-to-pay-15000000-for-violations-of-swap-business-conduct-standards.html","title":{"rendered":"CFTC Orders Goldman Sachs to Pay $15,000,000 for Violations of Swap Business Conduct Standards"},"content":{"rendered":"\n<p>(HedgeCo.Net) The Commodity Futures Trading Commission has issued an order simultaneously filing and settling charges against <strong>Goldman Sachs &amp; Co. LLC<\/strong> (Goldman) for violations of the CFTC\u2019s Business Conduct Standards applicable to swap dealers. Specifically, the CFTC found that Goldman failed to disclose dozens of pre-trade-mid-market marks (PTMMM), in violation of Regulation 23.431, and failed to communicate to clients in a fair and balanced manner based on principles of fair dealing and good faith, in violation of Regulation 23.433.<\/p>\n\n\n\n<p>Goldman admits that for nearly all \u201csame-day\u201d swaps executed in 2015 and 2016, it either failed to disclose any PTMMM or failed to disclose an accurate PTMMM, and that this conduct violated a CFTC regulation.<\/p>\n\n\n\n<p>The order imposes a $15,000,000 civil monetary penalty.<\/p>\n\n\n\n<p>\u201cThe purpose of the CFTC\u2019s Business Conduct Standards is to promote transparency and fairness in the swaps market. The CFTC is committed to ensuring that swap dealers abide by these standards, so that swap counterparties receive disclosures allowing them to assess material aspects of the swaps before entering into them. As today\u2019s penalty against Goldman demonstrates, the CFTC will aggressively pursue swap dealers that violate these business conduct standards,\u201d said Director of Enforcement Ian P. McGinley.<\/p>\n\n\n\n<p><strong>Case Background<\/strong><\/p>\n\n\n\n<p>The order finds that in 2015 and 2016, Goldman transacted dozens of \u201csame-day\u201d equity index swaps with U.S.-based clients. In a \u201csame-day\u201d equity index swap, the equity leg of the swap strikes on the \u201csame day\u201d as the other material terms of the swap are agreed upon, rather than\u2014as is typical\u2014the day after the date of agreement. The order finds that Goldman failed to disclose to clients the PTMMM of these swaps\u2014often disclosing a PTMMM for a different swap (the analogous \u201cT+1\u201d swap) instead, thereby obscuring the value of the same-day swap.<\/p>\n\n\n\n<p>The order finds that Goldman opportunistically solicited or agreed to enter into same-day swaps only on days and at times that were financially advantageous to Goldman and disadvantageous to its clients. Moreover, the manner in which Goldman communicated to clients caused the same-day swaps to appear more economically advantageous to the clients than they actually were. As found in the order, in certain instances, Goldman disclosed a PTMMM for the \u201cT+1\u201d swap and then bid over it for the \u201csame-day\u201d swap, giving the client the impression that the same-day swap was a better deal for the client than the T+1 swap when, in fact, it was not. Indeed, the order finds any marginal benefit Goldman offered to clients on the interest rate leg of the swap would be outweighed by the cost to clients on the equity leg when transacting \u201csame day.\u201d The order finds that Goldman failed to communicate in a fair and balanced manner by touting the supposed benefits of same-day swap transactions, but not the corresponding costs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(HedgeCo.Net) The Commodity Futures Trading Commission has issued an order simultaneously filing and settling charges against Goldman Sachs &amp; Co. LLC (Goldman) for violations of the CFTC\u2019s Business Conduct Standards applicable to swap dealers. Specifically, the CFTC found that Goldman [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3,16048,16047],"tags":[],"class_list":["post-84428","post","type-post","status-publish","format-standard","hentry","category-hedgeco-networks-press-releases","category-hedgeco-news","category-hedgecovest-news","category-insider-trading-2"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/84428","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=84428"}],"version-history":[{"count":1,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/84428\/revisions"}],"predecessor-version":[{"id":84429,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/84428\/revisions\/84429"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=84428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=84428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=84428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}