FINRA Fines Goldman Sachs for Failing to Prevent Trade-throughs in Its Alternative Trading System

FINRA announced that it fined Goldman Sachs Execution Clearing, L.P. ("Goldman Sachs") for failing to establish, maintain and enforce written policies and procedures that were reasonably designed to prevent trade-throughs of protected quotations in NMS stocks. This action pertains to Goldman Sachs' trading in its proprietary alternative trading system ("ATS").

The Order Protection Rule generally requires that trading centers either trade at best-quoted prices or otherwise route orders to the trading centers quoting the best prices. FINRA found that, from July 29, 2011 through August 9, 2011, there were more than 395,000 transactions executed in a Goldman Sachs ATS in which the execution traded through a protected quotation at a price that was inferior to the National Best Bid and Offer. According to FINRA, Goldman Sachs was unaware that it traded through a protected quotation in these instances.

In connection with approximately 395,000 trade-throughs, Goldman Sachs returned $1.67 million to disadvantaged customers and was fined $800,000.

See: FINRA News Release.