Securities Law Updates | New Releases/No Action Letters

May 5, 2010

SEC Releases Cease and Desist Order Against Goldman Sachs Execution & Clearing, L.P.

Cease and Desist Order Against Goldman Sachs Execution and Clearing, L.P.
File No. 3-13877, Release No. 62025, 5/4/2010

SEC Releases Cease and Desist Order Against Goldman Sachs Execution & Clearing, L.P.

The Securities and Exchange Commission (“SEC,” or “Commission”) has released an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”) against Goldman Sachs Execution & Clearing, L.P. (“GSEC”).

Specifically, the Order found that GSEC violated Rule 204T of Regulation SHO (“Rule 204T,” or “Rule”) on certain occasions in December 2008 and January 2009. Rule 204T was an important part of the Commission’s response to concerns about the effects of “naked” short selling upon securities prices.

The Rule, adopted as an interim final temporary rule on Oct. 17, 2008, required participants of a registered clearing agency such as GSEC to either deliver securities by a trade’s settlement date or, in connection with short sales, immediately purchase or borrow securities to close out the fail to deliver position by no later than the beginning of regular trading hours on the trading day following the settlement date.

GSEC initially responded to the Commission’s enactment of Rule 204T of Regulation SHO by implementing procedures that were inadequate in that they relied too heavily on individuals to perform manual tasks and calculations, without sufficient oversight or verification of accuracy. As a result, GSEC violated Rule 204T by failing to timely close out fail to deliver positions.

In this regard, the Order censured GSEC, directed that GSEC cease and desist from committing or causing any violations and any future violations of Exchange Act Rule 204, and ordered that GSEC pay a civil money penalty of $225,000. GSEC has also agreed to an undertaking requiring it to pay a fine in the amount of $225,000 to NYSE Regulation, Inc. GSEC consented to the issuance of the Order without admitting or denying any of the findings in the Order.

View a PDF of the release

Also See:

FINRA Issues New Investor Alert: The IRA Rollover: 10 Tips to Making a Sound Decision

The Royal Bank of Scotland Subsidiary Sentenced for Manipulation of Yen Libor

Agencies Approve Interim Final Rule Authorizing Retention of Interests in and Sponsorship of Collateralized Debt Obligations Backed Primarily by Bank-Issued Trust Preferred Securities

Interpretive Guidance on Municipal Advisor Registration Rules Now Out

New Date Announced for Compliance with Final Municipal Advisor Registration Rules

The most advanced document                
         management system in the world.

Only $59 / person / month
FeaturesLawLoop Demo
FeaturesWelcome to the Future
Play LawLoop Demo

Companies Mentioned

Securities Law

The following companies are mentioned in Securities Law Updates:

Securities and Exchange Commission

Harris Associates, L.P.

Citicorp USA, Inc.

Banc of America Securities LLC

CIBC World Markets Corp.

Citigroup Inc.

Barclays Capital Inc.

Citigroup Global Markets, Inc.

The Public Employees’ Retirement System of Mississippi

Morgan Stanley & Co., Inc.

Jan Charles Finance S.A.

Park East, Inc.

CIBC, Inc.

Citibank, N.A.

Metal Management, Inc.

European Metal Recycling, Ltd.

Salomon Smith Barney Inc. n.k.a. Citigroup Global Markets, Inc.

Calyon Securities (USA), Inc. f.k.a. Credit Lyonnais Securities (USA) Inc.

Calyon New York Branch (successor by operation of law to Credit Lyonnais New York Branch)

Salomon Smith Barney, Inc.

JPMorgan Chase & Co.

Dynex Capital Inc.

Citigroup, Inc.

JPMorgan Securities Inc.

Merit Securities Corp.

Scotia Capital (USA), Inc.,

Teamsters Local 445 Freight Division Pension Fund

Aetna, Inc.

Cowen & Co., LLC f.k.a. SG Cowen Securities Corp.

Societe Generale

SunTrust Bank

TD Securities (USA), Inc.

BMO Nesbitt Burns Corp. n.k.a. Harris Nesbitt Burns Corp.

Buchanan Ingersoll & Rooney Professional Corporation

Consolidated Leasing Hugoton Joint Venture #2

W. R. Huff Asset Management Co., LLC

Consolidated Leasing Anadarko Joint Venture


Guardian Capital Management

Free Enterprise Fund

Banc of America, N.A.

Vesta Insurance Group, Inc.

Beckstead and Watts, LLP

Barclays Bank PLC

Torchmark Corp.

Public Company Accounting Oversight Board

BNY Capital Markets, Inc.

KPMG Peat Marwick, LLP

Deloitte & Touche LLP

Credit Lyonnais Securities (USA) Inc.

Additional Resources

Securities Law

Further Reading in Securities Law

Other Recent Summaries

Recent Expert Legal Commentaries