U.K. Financial Services Authority Fines Goldman Sachs Group Inc. (NYSE: GS) $31 Million

The U.K.’s Financial Services Authority fined Goldman Sachs Group Inc. (NYSE: GS) $31 million on Thursday for notifying the regulator that one of its traders, Fabrice Tourre, was being investigated by the U.S. Securities and Exchange Commission

The SEC accused Tourre of fraud in a relation to the marketing of a synthetic collateralized debt obligation (CDO) known as Abacus 2007-AC1. Goldman Sachs Group Inc. (NYSE: GS) agreed to pay $500 million to settle the SEC’s civil fraud charges, but Tourre is individually fighting the allegations.

The FSA said that Goldman “did not have effective systems and controls in place to ensure that relevant information about the SEC investigation was shared” with its U.K. compliance department, which would have known to notify the FSA that Tourre was being investigated. As a consequence, “Mr. Tourre remained approved in the U.K. and able to perform a controlled function for several months without further enquiry or challenge from the FSA.”

Both organizations began making inquiries into Goldman Sachs about the Abacus CDO in April 2008. Tourre received a notice from the SEC in September 2008 and the FSA only became away of that investigation in April 2010 when the SEC announced proceedings against Tourre.

The FSA said that Goldman Sachs Group Inc. (NYSE: GS) did not deliberately withhold any information from the organization and had cooperated fully and agreed to settle at an early stage. As a result, the FSA gave Goldman Sachs Group Inc. (NYSE: GS) a 30% discount on the fine.

The Goldman Sachs Group, Inc. (Goldman Sachs) is a bank holding and a global investment banking, securities and investment management company. The Company provides a range of financial services to customers, including corporations, financial institutions, governments and high-net-worth individuals. Its depository institution subsidiary, Goldman Sachs Bank USA (GS Bank USA), is a New York State-chartered bank. It operates in three segments: Investment Banking, Trading and Principal Investments and Asset Management and Securities Services. In March 2010, the Company’s subsidiaries sold the La Francia mine and related infrastructure assets, including Concession 5160, and Adromi Capital Corp., the holder of the La Francia II concession, to a subsidiary of The Goldman Sachs Group, Inc. In May 2010, Nexen Inc. sold its natural gas trading operations to a unit of The Goldman Sachs Group, Inc.

Shares of Goldman Sachs Group Inc. (NYSE: GS) traded up 0.16% during mid-day trading on Friday.

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