Banking giant Goldman Sachs was fined £17.5m (€21m) by the UK’s Financial Services Authority today – the second biggest penalty ever issued by the City watchdog.
The American investment group was punished for failing to tell the FSA that one of its traders was under investigation when he took up a job at the bank’s London office in 2008.
Fabrice Tourre was at the centre of claims that the bank misled buyers of complex mortgage-backed investments in 2007, when the US housing market bubble was bursting.
The FSA began its investigation in April after the US Securities and Exchange Commission (SEC) charged Goldman over its Abacus debt product - part set up by Tourre.
The bank settled the fraud charge in mid-July by agreeing to pay £356m (€431m) – the largest fine in the SEC’s history. Tourre denied any wrongdoing.
But in November 2008, while under investigation, Tourre transferred to London to become executive director of Goldman Sachs International (GSI) – which meant he became an FSA-approved person.
The FSA said Goldman Sachs was required to have systems in place to ensure information surrounding the SEC investigation was shared between its US and UK offices.
But the UK regulator said GSI did not deliberately withhold information, and as it co-operated fully and agreed to settle at an early stage, it qualified for a 30% discount. Without the discount the fine would have been £25m (€30m).
The previous largest fine was the £33m (€40m) penalty imposed on JP Morgan in June for failing to protect client money.