The Financial Services Authority (FSA) of UK has fined Goldman Sachs International (GSI) £17.5m for breaching FSA rules.
The fine relates to GSI’s failure to disclose details about Fabrice Tourre, the London-based trader at Goldman who was accused of fraud by the US Securities and Exchange Commission (SEC) in an April lawsuit.
Tourre was being investigated over his role in the creation and sale of a synthetic collateralized debt obligation called Abacus 2007 AC-1 by the SEC.
The Abacus product was structured by GSI’s US affiliate, Goldman Sachs & Co (GSC), and marketed (in part) by GSI from the UK to institutional investors.
Tourre was, while at GSC, part of the team that structured Abacus. Later, Tourre transferred to GSI in London and became an FSA approved person in November 2008.
FSA said that GSI did not have effective systems and controls in place to ensure that relevant information about the SEC investigation was shared between GSC and the people within GSI who needed to know about it.
In particular, GSI did not have effective procedures in place to ensure that its compliance department was made aware of the SEC investigation so that it could consider whether any notifications needed to be made to the FSA in compliance with GSI’s regulatory reporting obligations.