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Alternative Market Briefing

CFTC fines Goldman Sachs $7m, sues 3 firms

Wednesday, March 14, 2012

amb
Bart Chilton
Bailey McCann, Opalesque New York:

The Commodities Futures Trading Commission (CFTC) has fined Goldman Sachs and sued three other firms for failures to properly supervise and handle customer accounts. The CFTC has been conducting a sweeping investigation of the organizations it regulates in light of issues arising out of the MF Global failure.

"I hope folks are getting the message: Don't screw with customer funds," CFTC Commissioner Bart Chilton said in a statement.

The regulator is cracking down hard on mismanagement of customer accounts - a move which some observers say is as much a result of criticism of its oversight as the issues surrounding MF Global. Goldman Sachs Execution & Clearing, L.P. (GSEC), was fined $7m to settle CFTC charges that it failed to diligently supervise accounts that it carried from about May 2007 to December 2009.

According to the CFTC, Goldman Sachs Execution & Clearing received $1.5m gross fees while it failed to appropriately manage its accounts. GSEC provided back-office and other services to some clients who themselves are broker-dealers and failed to investigate questionable conduct by broker-dealers managed by GSEC, according to the regulator. The questionable conduct included false representations of activity made by broker-dealers.

Futures firm MBF Clearing Corp is ......................

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