TAG | Goldman Sachs
Comments off · Posted by Securities Lawyer in FINRA
A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Goldman Sachs & Co. to pay approximately $2.5 million to Tracy Landow, a client who said she was sold an inappropriate investment in a private-equity fund.
Ms. Landow accused Goldman Sachs and her broker of making an unsuitable recommendation in the Goldman Sachs Special Opportunities Fund 2006, according to the FINRA ruling.
The FINRA arbitration panel found that the “very complex instrument is unsuitable” for Ms. Landow, an unsophisticated investor who had no prior investment experience and only a high school education. But that’s not why they ruled against the broker-dealer unit of Goldman Sachs Group Inc. The FINRA panel determined that there were problems with the fund’s subscription agreement, making it invalid. The firm was ordered to take back her investment in the fund and return approximately $2.5 million in principal, interest, and expert witness fees.
The panel further ruled that because Ms. Landow’s broker didn’t oversee the defective subscription agreement, he is not responsible for the fund or the investments that followed.
Not all three panelists felt the same. In a rare dissent, one FINRA arbitrator said that while the subscription agreement may be of concern, it’s only a small factor in the case. She found the fund to be an appropriate investment for Ms. Landow and didn’t think the firm should be required to take it back, according to the decision.
Soreide Law Group, PLLC, represents clients nationwide before FINRA. Call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552.
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Comments off · Posted by Securities Lawyer in FINRA
In an April 12, 2012, article for Forbes, Halah Touryalai writes that Goldman Sachs was hit with a $22 million penalty for claims that its analysts shared non-public short-term trading ideas with favored clients.
Touryalai reports that Goldman Sachs agreed to settle the charges that its equity analysts met during weekly “huddles” with the firm’s traders to discuss “material, nonpublic information about upcoming research changes” that would eventually be shared with a select group of top clients. The firm will pay $11 million to the SEC and another $11 million to FINRA in a related proceeding.
The SEC said the firm lacked policies for preventing clients and employees from trading on the non-public information. “Higher-risk trading and business strategies require higher-order controls,” said Robert S. Khuzami, Director of the Commission’s Division of Enforcement. “Despite being on notice from the SEC about the importance of such controls, Goldman failed to implement policies and procedures that adequately controlled the risk that research analysts could preview upcoming ratings changes with select traders and clients.”
This practice was commonplace between at least 2006 and 2011. In fact, the SEC says, Goldman created a program dubbed the Asymmetric Service Initiative (ASI) in which analysts shared information and trading ideas from the huddles with select clients.
Touryalai gives these examples that the SEC cites in its Order:
- Company A – In April 2009, the Goldman equity research analyst covering Company A discussed the stock during a huddle, even though four days earlier he had recommended the stock to the IRC as a potential addition to Goldman’s Conviction List. The script for the huddle noted that, while investor sentiment was negative on Company A, the analyst covering the stock expected that interest in stocks in that industry would increase before an upcoming industry conference. Five days later, the analyst’s rating on Company A was upgraded from Neutral to Buy, and the stock was added to the Conviction List. There is no record of anyone from Goldman’s compliance group having attended this huddle.
- Company B – In April 2008, the Goldman equity research analyst covering Company B discussed the stock during a huddle, after he had already drafted a report upgrading Company B from Neutral to Buy. The script for the huddle noted that the analyst looked to turn more positive on his group, and highlighted Company B. Company B was also added to the Financials sector Record of Ideas that day. Within hours after the huddle, the analyst recommended an upgrade of Company B at an internal meeting.Four business days later, Goldman upgraded Company B from Neutral to Buy. The following day, the analyst removed Company B from the Record of Ideas. A representative from Goldman’s compliance group did not attend the huddle.
- Company C – In July 2008, the analyst covering Company C discussed the stock during a huddle, even though he had already proposed a potential downgrade of the stock and scheduled an IRC meeting to discuss the downgrade. The script for the huddle stated that the analyst expected certain companies to be “under pressure,” including Company C. The next day, the analyst downgraded
The Forbes article states that last June Goldman was hit with similar claims by the state of Massachusetts and agreed to pay a $10 million over the s0-called trading huddles.
Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: www.securitieslawyer.com.
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In a recent New York times article, Greg Smith writes about his experience with Goldman Sachs as an executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa. Here are some excerpts from his article that highlight Goldman Sachs intention to make money off their clients not for their clients.
By GREG SMITH New York Times article
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Comments off · Posted by Securities Lawyer in FINRA
Soreide Law Group, PLLC, has announced it’s investigation into the Goldman Sachs Global Alpha Fund which was recently closed. According a New York Times article, Global Alpha was started in 1995 with just $10 million. Over time the results soared. At its peak in 2007, Global Alpha ran about $12 billion, although that number had dwindled to about $1 billion in the wake of a number of wrong bets. The fund was down about 12 percent in 2011. They then advised clients that the fund was closing. Goldman Sachs’s Global Alpha Fund was once the firm’s largest hedge fund. The Wall Street Journal said Global Alpha Fund had a far worse performance than other similar hedge funds. Hedge funds such as Global Alpha Fund, often use computer trading programs to trade quickly and move in and out of stocks, bonds, currencies and other assets, avoiding steep losses by quickly exiting losing positions. These hedge funds often use significant leverage, increasing substantial risks of loss from investing in such funds.
Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member experienced losses in Goldman Sach’s Global Alpha Fund, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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