Goldman Sachs Group Inc. agreed to pay $15 million to settle allegations that its securities lending violated federal regulations, the Securities and Exchange Commission said Thursday. Specifically, the SEC accused the broker-dealer of failing to adequately secure the stock needed to administer a short-selling trade. In a short sale, investors borrow stock and hope to repay it at a lower price, thus profiting if the stock...
The US Securities and Exchange Commission (SEC) announced yesterday that Goldman Sachs is to pay $15m to settle civil charges that its securities lending practices violated federal regulations. The bank had made improper representations to customers who requested that the firm locate certain stocks for short selling; Goldman had told customers that it had arranged to borrow, or believed it could borrow, the security to settle the short sale, known as "granting locates". In a statement, SEC chairman Christopher Cox said: "The SEC's investigation found that, contrary to Goldman's representations, there was no way in which Goldman knew of any such arrangements with customers.