CFTC sanctions Goldman Sachs over 6-year rate-manipulation scheme

The Commodity Futures Trading Commission (CFTC) announced Wednesday Goldman Sachs will pay $120 million to settle civil charges it attempted to exploit a global reference value for fixed interest rate swaps.

According to regulators, brokers with the multinational finance giant routinely attempted to move the ISDAFIX benchmark by means of mass trades near the late-morning settling of the rate between 2007–2012.  Regulators also contend Goldman Sachs’ floor traders also executed the trades through the broker bound with setting the rate.

A statement describing the agreement with the investment bank company contained a reference to regulators concluding their investigation was initially hampered by the firm’s reluctance to cooperate.  The CFTC revealed Goldman Sachs failed to furnish documents relevant to the probe.

A mechanism to aid in the cash settlement of options on interest rate swaps, ISDAFIX, now known as ICE Swap Rate, is frequently made use of by government and public pension funds to safeguard against future interest rate changes.

Following the resolution of the charges, Goldman Sachs spokesman Michael DuVally released a statement which read:

“We are pleased to have resolved these matters and have already taken steps to enhance our policies and procedures.”

Goldman Sachs’ settling of this case follows similar ISDAFIX benchmark cases against Citibank, which eventually paid $250 million in May, and London-based banking firm Barclays, which paid $150 million in 2015.

As part of the agreement, Goldman Sachs neither admitted nor denied wrongdoing.

 

[Business Insider] [Photo courtesy taxfoundation.org]