Goldman Sachs Sanctioned for Failure to Supervise
According to the Financial Industry Regulatory Authority (FINRA), the regulator has sanctioned Goldman Sachs & Co. LLC with a fine of $1.25 million in connection with alleged violations of rules concerning fingerprinting.
Federal securities laws require FINRA member firms to fingerprint most associated persons when they associate with a firm. The firms then review the fingerprint results as part of their background check to assure that the individual is qualified and to rule out any criminal and/or regulatory events.
From January 2015 to November 2019, Goldman reportedly failed to fingerprint and screen a significant number of its U.S.-based non-registered associated persons. The firm reportedly failed to timely fingerprint at least 1,061 non-registered associated individuals.
Further, Goldman was reportedly unable to determine whether it timely fingerprinted an additional 4,089 non-registered associated persons because it failed to locate any documentation reflecting that the firm fingerprinted these individuals. According to FINRA, Goldman failed to maintain fingerprint records for an additional 466 non-registered associated persons whom the firm fingerprinted.
In two separate incidents, between April 2018 and November 2019, Goldman reportedly allowed two non-registered associated persons who were subject to disqualification to become and remain associated with the firm.
The firm allegedly failed to timely submit for processing the individual’s fingerprints, and in the first of the two instances, it failed to properly consider information in its possession about the individual’s disqualified status.
Goldman obtained the first individual’s fingerprints in April 2018 and she became associated with the firm in May 2018, yet the firm did not submit the fingerprints for processing until the following April 2019. Although Goldman received information that FINRA barred the individual for conversion in June 2014 Goldman still permitted this individual to associate with the firm. When the firm finally learned about the representative’s statutory disqualification, it terminated her employment.
According to FINRA, Goldman obtained the second individual’s fingerprints in May 2019 and he became associated with the Firm in June 2019, but the firm didn’t submit this individual’s fingerprints to FINRA for processing until August 2019, when it was notified by FINRA that the individual had a 2012 felony conviction on his record. After investigating the individual’s background further, Goldman reportedly terminated his employment in November 2019.
FINRA said that Goldman failed to maintain a reasonable supervisory system and written procedures to identify and properly screen individuals who became associated with the firm in a non-registered capacity.
In addition to the fine, Goldman has agreed to a censure and to review its systems and procedures regarding the identification, fingerprinting, and screening of non-registered associated persons to ensure that current systems and procedures are reasonably designed to achieve compliance with governing securities laws and regulations, according to the regulator.
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