The Commodity Futures Trading Commission’s (CFTC) Whistleblower Office released a Notice of Covered Action (“NCA”) on August 31st pertaining to an enforcement action levied against Goldman Sachs. The company is alleged to have committed violations in its record keeping practices.
The NCA refers to a legal action on August 29th, accusing Goldman Sachs of violating the cease-and-desist provision of a previous order and had also committed recordkeeping violations related to its inadequate recording and retention of specific audio files. Goldman Sachs agreed to a $5.5 million settlement.
In general, an NCA begins the process for whistleblower award claims. The CFTC Whistleblower Program offers monetary awards of 10-30% from the enforcement action funds related to whistleblowing.
Director of Enforcement Ian McGinley highlighted the CFTC’s commitment to enforcing compliance, stating, “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.” McGinley continued, “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 2019, Goldman Sachs settled CFTC charges, agreeing to pay $1 million and cease further violations of CFTC record keeping provisions, after it was found that the company had failed to record phone lines of a trading and sales desk for a period of 20 days.
The CFTC reports that, “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. Specifically, Goldman used a vendor service to record calls made on mobile devices. Beginning in March 2020, 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.”
Since its inception, the CFTC Whistleblower Program has recovered over $3 billion from fraudsters, awarding more than $330 million to qualified whistleblowers. Hopefully this Goldman Sachs whistleblower will add to the CFTC Whistleblower Program’s successful results.
What are the potential consequences of the enforcement action taken against Goldman Sachs Group?
The CFTC’s enforcement could lead to further investigations and regulatory scrutiny of Goldman Sachs’ operations and practices. In addition to financial consequences, the enforcement action could also damage Goldman Sachs’ reputation and erode public trust in the company.
If found guilty, Goldman Sachs could face fines, penalties, and other sanctions imposed by the CFTC.
The enforcement action taken against Goldman Sachs over allegations of record keeping violations could result in significant consequences for the company.
Why is the CFTC Whistleblower Program important?
The CFTC Whistleblower Program is important because it encourages individuals to report potential violations of the Commodity Exchange Act (CEA) and other CFTC regulations.
Whistleblowers play a crucial role in helping the CFTC identify and prosecute individuals and companies that engage in fraudulent or manipulative behavior in the commodities and derivatives markets.
The program provides monetary incentives and protections to whistleblowers who provide original information that leads to successful enforcement actions, which can result in significant financial penalties and other sanctions against wrongdoers.