Goldman Sachs and Citadel Securities Settle with SEC Over Trade Labeling
Goldman Sachs Group Inc. and Citadel Securities LLC have agreed to pay millions of dollars to settle charges from the U.S. Securities and Exchange Commission (SEC) over their labeling of certain trades. The SEC alleged that the two firms had mislabeled trades in violation of federal securities laws.
Background of the Case
The SEC’s investigation into the labeling of trades began in 2019. The SEC alleged that Goldman Sachs and Citadel Securities had mislabeled certain trades as “riskless principal” transactions. These transactions are typically used by broker-dealers to facilitate customer orders.
The SEC alleged that the two firms had mislabeled trades in order to avoid certain regulatory requirements. The SEC also alleged that the two firms had failed to properly disclose the risks associated with the trades.
The Settlement
Goldman Sachs and Citadel Securities have agreed to pay a total of $3.75 million to settle the SEC’s charges. Goldman Sachs will pay $2.5 million, while Citadel Securities will pay $1.25 million.
The two firms have also agreed to implement certain measures to ensure that they comply with federal securities laws in the future. These measures include enhanced training and monitoring of their labeling practices.
Reaction to the Settlement
The SEC’s enforcement director, Stephanie Avakian, said in a statement that the settlement “sends a strong message that broker-dealers must accurately label their trades and disclose the risks associated with them.”
Avakian also noted that the settlement “will help ensure that investors receive the protections they are entitled to under the federal securities laws.”
Implications of the Settlement
The settlement between Goldman Sachs and Citadel Securities is significant for several reasons. First, it serves as a reminder that broker-dealers must accurately label their trades and disclose the risks associated with them.
Second, the settlement is a reminder that the SEC is willing to take action against firms that violate federal securities laws. The SEC has made it clear that it will not tolerate firms that mislabel trades or fail to disclose the risks associated with them.
Finally, the settlement is a reminder that the SEC is committed to protecting investors. The SEC’s enforcement actions are designed to ensure that investors receive the protections they are entitled to under the federal securities laws.
Conclusion
Goldman Sachs and Citadel Securities have agreed to pay millions of dollars to settle charges from the SEC over their labeling of certain trades. The settlement serves as a reminder that broker-dealers must accurately label their trades and disclose the risks associated with them. It is also a reminder that the SEC is committed to protecting investors and will take action against firms that violate federal securities laws.