Goldman, Citadel Securities Pay SEC Millions Over Trade Labeling

(Bloomberg) - Goldman Sachs Group Inc. and Citadel Securities each reached multimillion-dollar settlements with the Securities and Exchange Commission on Friday over how they labeled millions of trades.

Goldman agreed to pay a $6 million fine for sending inaccurate or incomplete trading data to the SEC on at least 163 million transactions over the course of a decade. Meanwhile, the SEC said that a coding error at Citadel Securities led to short sales being labeled as longs, and vice versa, and that Ken Griffin’s market-making firm would pay $7 million.

Gurbir Grewal, the SEC’s enforcement director, has made recordkeeping lapses a priority of his tenure. Unrelated to Friday’s cases, more than a dozen Wall Street firms have paid over $2.5 billion in fines combined for using personal phones and messaging services like WhatsApp to conduct business — fines brought under recordkeeping rules.

Friday’s settlements are part of a flurry of activity from the SEC’s enforcement staff before the end of the fiscal year next week. The agency’s penalty and case volume is closely watched by Congress, and September is historically the busiest month.

A looming government shutdown adds additional pressure to finish probes. Many SEC employees will not be able to work starting in October, if Congress cannot agree on a deal to fund the government.

Internal Lapses

At Goldman, the regulator said it found 43 different types of errors in data files known as blue sheets. These files include detailed trading information that regulators request to investigate suspect trading. The New York-based bank admitted to the SEC’s findings and said Friday that it was “pleased to have resolved this matter.”

The errors included reporting trades in US Central Time, instead of the required Eastern Time, and misreporting long sales as shorts. The bank, which self-reported many of the errors, is in the process of submitting corrected blue sheets to the SEC.

The alleged inaccuracies at Citadel Securities did not impact the way the broker handled client orders, and were fixed within the day, the SEC said. Citadel Securities said the issue stemmed from a coding change that affected a small percentage of order markings.

“We detected the issue and promptly fixed it more than three years ago,” Citadel Securities said in a statement.

By Austin Weinstein


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