Goldman Sachs To Settle Improper Trading Probe For Nearly $110M

The Goldman Sachs Group GS has reached a settlement with two U.S. authorities to settle claims that its traders wrongfully shared information regarding orders of its customers, with motives of taking advantage of the market.

Goldman would be paying $54.7 million each to the New York's Department of Financial Services and the Federal Reserve. Also, it is required to submit in writing, plans to improve internal controls and strengthen risk management program.

The Wall Street biggie was accused of using multi-party electronic chat rooms to share private information about clients using code names like "satan", "fiddler", etc with other global banks for a span about five years (ending early 2013), in exchange of information about potential bids or prices for particular currencies.

These improper trading activities affected currency prices, which the banks used to their advantage for achieving higher profits at the cost of customers.

In a similar probe, Citigroup C and Morgan Stanly MS were fined $2.96 million in January 2018 by the Securities and Exchange Commission. Both the companies were accused of misleading investors about a foreign exchange trading program by not disclosing about the actual burden to be taken by investors.

Moreover, back in 2015, Citigroup, JPMorgan Chase JPM, Royal Bank of Scotland RBS and Barclays BCS had paid about $5 billion for conspiring to rig rates by forming a so-called cartel.

Close scrutiny by financial regulators helps keep big banks from exploiting customers. Though the current settlement might impact Goldman's financials to an extent, it remains well poised to gain from the favorable market conditions.

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