Release Number 8769-23
CFTC Orders Goldman Sachs to Pay $5.5 Million for Recordkeeping Violations and Violating a Prior Commission Order
August 29, 2023
Washington, D.C. — The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Goldman Sachs & Co. The order finds Goldman violated the cease-and-desist provision of a prior order and committed recordkeeping violations in connection with its failure to properly record and retain certain audio files. [See CFTC Press Release No. 8086-19]
The order requires Goldman to pay a $5.5 million civil monetary penalty and to cease and desist from further violations of the recordkeeping provisions of the Commodity Exchange Act and CFTC regulations, as charged.
“As this case demonstrates, the CFTC will continuously pursue swap dealers that fail to meet their recording obligations and there will be consequences for violating CFTC orders, including increased penalties,” said Director of Enforcement Ian McGinley. “We are committed to holding swap dealers accountable when they fail to comply with their regulatory obligations and fail to abide by obligations imposed by prior CFTC orders.”
In November 2019, the CFTC entered an that found Goldman failed to record the phone lines of a trading and sales desk for 20 calendar days in January and February 2014, after its recording hardware malfunctioned following a software patch. The CFTC ordered Goldman to pay a $1 million civil monetary penalty and to cease and desist from further violations of CFTC recordkeeping provisions.
The order entered today finds that, following the issuance of the November 2019 order, Goldman had additional recordkeeping failures, in violation of the cease-and-desist provision of the earlier order. Specifically, Goldman used a vendor service to record calls made on mobile devices. Beginning in March 2020, increased use of the vendor’s recording service during the pandemic led to increased failures in the vendor’s hardware. As a result, Goldman failed to fully record and retain thousands of mobile device calls. Goldman discovered the issue when investigating reports of poor call quality from employees using the recording service. An interim fix was implemented in May 2020, and the vendor’s hardware was replaced with an alternative system in September 2020.
Separately, beginning in March 2020, Goldman began using software from another vendor that was designed to replicate the experience of a hard-wired trading turret—a specialized phone setup used to facilitate trading—via a computer. In late May 2020, Goldman discovered a software issue where the system sometimes failed to properly record audio. As a result, Goldman failed to fully record and retain thousands of calls. After implementing an interim fix, a permanent fix in the form of a software update was completed in June 2022.
The order recognizes Goldman’s cooperation with the CFTC’s investigation and also acknowledges Goldman’s representations concerning its remediation in connection with this matter.
The Division of Enforcement staff responsible for this matter are Devin Cain, Alejandra de Urioste, R. Stephen Painter, Jr., David W. MacGregor, Lenel Hickson, Jr., and Manal Sultan, and former staff member Gabriella Geanuleas.