Goldman Sachs was fined $5.5 million by the Commodity Futures Trading Commission (CFTC) as part of a settlement addressing alleged audio recordkeeping violations that followed a previous consent order the bank reached with the agency.
Goldman in November 2019 agreed to pay $1 million in settling with the CFTC over allegations it failed to retain certain audio recordings as required for swap dealers. That order contained cease-and-desist provisions violated by the firm as part of its larger penalty announced Tuesday.
“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,” said CFTC Director of Enforcement Ian McGinley in a press release.
The details: In March 2020, coinciding with the start of the Covid-19 pandemic, Goldman increased use of a vendor recording service for logging calls made by employees on mobile devices. This additional use played part in failures in the vendor’s hardware, according to the CFTC, and Goldman failed to properly record thousands of calls as a result.
Also in March 2020, Goldman began using software from another vendor that replicated a phone setup for facilitating trading via computer. That system had a glitch that led to audio not properly being recorded for thousands of calls, the CFTC said.
Compliance considerations: Goldman discovered the mobile device recording issue in May 2020 and replaced the system in September 2020, according to the CFTC’s order. The bank analyzed that about 2.2 percent of mobile calls from March to September 2020 were impacted by the issue.
The computer system glitch was also discovered in May 2020 but not patched permanently until June 2022. That issue was similarly analyzed to have affected approximately 2 percent of calls using the system during the relevant period.
Goldman shared the results of its analysis with the CFTC and cooperated with the agency’s investigation. The firm was faulted for not logging alternative records of its calls while addressing the alleged recording issues.
Goldman did not provide comment. The bank neither admitted nor denied the CFTC’s findings.