Huddles were a practice where the firm’s equity research analysts met to provide their best trading ideas to firm traders and later passed them on to a select group of top clients. The SEC noted that many of the clients and traders engaged in frequent, high-volume trading. The SEC charge also indicated that its analysts could share material and non-public information about upcoming research changes.
Another part of the settlement shows that the firm also agreed to be censured, to be subject to a cease-and-desist order, and to review and revise its written policies and procedures to correct the deficiencies identified by the SEC.
As far as what $22 million really boils down to, it is not that much. Goldman Sachs had $28.8 billion in revenues and net income from operations was $4.44 billion in 2011, but that was down from $39.1 billion in 2010 revenues and 2010 net income from operations of more than $8.3 billion.
FINRA has also announced today a settlement with Goldman Sachs for supervisory and other failures related to the huddles.
JON C. OGG
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