Goldman Sachs International has been slapped with a £34m fine for “serious and prolonged failures” of inaccurately reporting 220 million transactions under Mifid regulation.
The Financial Conduct Authority (FCA) said the bank made millions of errors in transaction reporting over a 10-year period, between November 2007 and March 2017.
The regulator found Goldman Sachs failed to provide complete, accurate and timely information in relation to approximately 213.6 million reportable transactions and incorrectly reported 6.6 million transactions.
It also failed to take reasonable care to organise and control its affairs responsibly and effectively in respect of its transaction reporting, the FCA said. These failings related to aspects of Goldman Sachs’ change management processes, its maintenance of the counterparty reference data used in its reporting and how it tested whether all the transactions it reported to the FCA were accurate and complete.
The fine was reduced from £49m because Goldman Sachs agreed to resolve the matter promptly.
FCA executive director of enforcement and market oversight Mark Steward said: “The failings in this case demonstrate a failure over an extended period to manage and test controls that are vitally important to the integrity of our markets. These were serious and prolonged failures. We expect all firms will take this opportunity to ensure they can fully detail their activity and are regularly checking their systems so any problems are detected and remedied promptly, unlike in this case.”
Fourteenth company fine over Mifid breaches
The FCA has already fined 13 other firms over Mifid transaction reporting breaches: UBS AG, Merrill Lynch International, Deutsche Bank AG, Royal Bank of Scotland, James Sharp & Co, Plus500UK, City Index, Société Générale, Commerzbank AG, Instinet Europe, Getco Europe, Credit Suisse and Barclays Capital Securities and Barclays Bank.
Mifid regulation relating to transaction reporting was in place between 5 November 2007 and 2 January 2018 across all European Economic Area (EEA) states. It introduced changes to the list of products in which transactions had to be reported and standardised the list of information which had to be included in the reports.
The directive’s successor, Mifid II, was introduced on 3 January 2018 to improve the functioning of financial markets following the financial crisis.
Duff & Phelps managing director, compliance and regulatory consulting, Nick Bayley noted the Mifid cases are quite historical, dating back to 2007, but show the regulator’s intent on compliance.
“These big fines show that transaction reporting remains a key area of enforcement focus for the FCA, although we shouldn’t hold our breath when waiting for similar cases under Mifid II to come out.”
He added: “Transaction reporting is complex and difficult to get right and the regulator’s expectation are high. In our experience very few firms are actually getting their Mifid II reporting completely right and many are struggling with the added complexity that Mifid II has brought.”
