The Commodity Futures Trading Commission (CFTC) settled charges against Goldman Sachs for violating the cease-and-desist provision of a prior order as well as recordkeeping violations in connection with certain audio files.
Goldman Sachs was hit with a $5.5 million civil monetary penalty and is required to cease and desist from further violations of the recordkeeping provisions of the Commodity Exchange Act and CFTC regulations.
“As this case demonstrates, the CFTC will continuously pursue swap dealers that fail to meet their recording obligations and there will be consequences for violating CFTC orders, including increased penalties,” Director of Enforcement Ian McGinley said. “We are committed to holding swap dealers accountable when they fail to comply with their regulatory obligations and fail to abide by obligations imposed by prior CFTC orders.”
In November 2019, the CFTC found Goldman Sachs failed to record the phone lines of a trading and sales desk for 20 calendar days in January and February 2014, after its recording hardware malfunctioned following a software patch. As a result, the CFTC fined the company $1 million and called upon it to cease and desist from further violations of CFTC recordkeeping provisions.
Following the issuance of the November 2019 order, Goldman had additional recordkeeping failures, in violation of the cease-and-desist provision of the earlier order, the CFTC found. Specifically, Goldman used a vendor service to record calls made on mobile devices starting in March 2020. The increased use of the vendor’s recording service during the pandemic led to increased failures in the vendor’s hardware. As a result, Goldman failed to fully record and retain thousands of mobile device calls. Goldman discovered the issue when investigating reports of poor call quality from employees using the recording service.
A fix was implemented in May 2020, and the vendor’s hardware was replaced with an alternative system in September 2020.
Also in March 2020, Goldman began using software from another vendor that was designed to replicate the experience of a hard-wired trading turret via a computer. In late May 2020, Goldman discovered a software issue where the system sometimes failed to properly record audio. As a result, Goldman failed to fully record and retain thousands of calls. After implementing an interim fix, a permanent fix was completed in June 2022.
The CFTC recognized Goldman’s cooperation with its investigation.