The Financial Services Authority (FSA) imposes a fine amounting to ₤17.5 million against London-based firm Goldman Sachs International (GSI) for failure to disclose relevant information on its involvement in the marketing of the Abacus 2007-AC1 synthetic collateralized debt obligation (Abacus).
GSI’s affiliate in the United States (U.S.), Goldman Sacha & Co. (GSC) structured the Abacus as a product, and the GSI in London marketed it in part to institutional investors. Despite of its involvement in the marketing, no one in the company disclosed to the FSA any relevant information about it, in contravention of the laws, even after the U.S. Securities and Exchange Commission (SEC) commenced their investigation on the GSC’s Abacus. The U.S. SEC subsequently issued Wells Notices to GSC and GSI’s Fabrice Tourre containing allegations of serious violations of U.S. securities law. Again, no one at GSI informed the FSA about the receipt of the notices. As a result, Tourre remained approved in the U.K. and was able to perform a controlled function for several months without further inquiry or challenge from the FSA. The latter agency only became aware of the case on 16 April 2010 when the U.S SEC announced that it had commenced an enforcement proceeding against GSC and Tourre.
GSI fully cooperated on the case instituted by FSA against them and agreed to settle at an early stage. FSA would have imposed a fine of ₤25 million, but less the 30% discount under the agency’s executive settlement procedure, it became ₤17.5 million.