Alabama Annuity News

SEC And NYSE Settle Enforcement Actions Against Goldman Sachs

The Securities and Exchange Commission and the NYSE Regulation, Inc. today settled separate enforcement proceedings against a prime broker and clearing affiliate of The Goldman Sachs Group, Inc. for its violations arising from in an illegal trading scheme carried out by customers through their accounts at the firm. Both proceedings find that firm customers traded and profited by illegally selling securities short just prior to public offerings of the companies' securities. In connection with the illegal short sales, the SEC and the NYSE found that the affiliate, Goldman Sachs Execution and Clearing L.P. (Goldman), violated the regulations requiring brokers to accurately mark sales long or short and restricting stock loans on long sales. The SEC and the NYSE further found that, if Goldman had instituted and maintained appropriate procedures, it could have discovered through its own records the customers' illegal activity.

The SEC Order and the NYSE's Decision allege that Goldman's customers carried out the illegal short-selling scheme by placing their orders to sell through the firm's REDI System© - Goldman's direct market access, automated trading system - and falsely marking the orders "long." Relying solely on the way its customers marked their orders, Goldman executed the transactions as long sales. In addition, because the customers had sold the securities short and did not have the securities at settlement date, Goldman delivered borrowed and proprietary securities to the brokers for the purchasers to settle the customers' purported "long" sales. Both the SEC Order and the NYSE Decision find that, as described in the Order and Decision, Goldman's exclusive reliance on its customers' representations that they owned the offered securities was unreasonable. Read more at sec.gov.

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	Did You Know?
	The NASD Reminds Members of Their Responsibilities Regarding the Sales of Variable Annuities NASD is an independent self-regulatory organization charged with regulating the securities industry, including sellers of variable annuities. The NASD recently issued a release to its members reminding them of their responsibilities to investors in selling variable annuities (NASD Notice 99-35, "The NASD Reminds Members of Their Responsibilities Regarding the Sales of Variable Annuities").