(Bloomberg News) Goldman Sachs Group Inc. agreed to pay a $10 million fine and stop holding private meetings of stock analysts and traders known as "huddles" to settle an investigation by Massachusetts's chief securities regulator.
The settlement ends a two-year probe by William Galvin, the secretary of the commonwealth, into New York-based Goldman Sachs's "Asymmetric Service Initiative," in which information on analysts' trading ideas was disseminated earlier to favored clients. The company will "permanently discontinue" the practice, Galvin's office said in a statement yesterday.
Goldman Sachs analysts, who publish stock recommendations for long-term investments, attended weekly meetings where they shared short-term trading ideas, the Wall Street Journal reported in 2009, citing internal company documents. Galvin's office sent a subpoena to Goldman Sachs shortly after the article was published. The Securities and Exchange Commission and Financial Industry Regulatory Authority also began examining the practice.
Finra is close to concluding its investigation of Goldman Sachs's trading huddles, a person familiar with the situation said yesterday. The person spoke on condition of anonymity because the details of the investigation aren't public.
Michelle Ong, a spokeswoman for Finra, said she couldn't comment. John Nester, a spokesman for the SEC, declined to comment.
"We are pleased to have resolved this matter with the Massachusetts securities division," Stephen Cohen, a Goldman Sachs spokesman in New York, said in an interview.
While the settlement finds that Goldman Sachs "engaged in dishonorable or dishonest conduct," it adds that nothing in the settlement "shall be construed as a finding or admission of fraud."