Tuesday, November 9, 2010

FINRA Press Release: Disclosure of Wells Notices

Goldman Sachs to Pay $650,000 for Failing to Disclose Wells Notices

The Financial Industry Regulatory Authority (FINRA) issued a press release today announcing that 
it has fined Goldman, Sachs & Co. $650,000 for failing to disclose that two of its registered representatives, including Fabrice Tourre, had received formal notices from the Securities and Exchange Commission (SEC) that they were the subjects of investigations. Tourre's "Wells Notice" was issued in connection with the SEC's investigation of an offering of a synthetic collateralized debt obligation (CDO) called ABACUS 2007-ACI (Abacus).
The settlement is detailed in the FINRA AWC No. 20100224738-01.

A Wells Notice is given by FINRA to individuals or firms to inform them of FINRA’s intention to bring charges and disciplinary action against them. FINRA has rules that require the individuals or firms to update their regulatory record within 30 days of receiving a Wells Notice. FINRA claims that Tourre did not update its regulatory record within 30 days of receiving his Wells notice. Furthermore, FINRA claims that Goldman did not provide proper supervision to ensure that, when its individual employees are subject to regulatory investigation and subsequent reporting requirements, it is properly informed of both the investigation and the requirements.

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