The Securities and Exchange Commission (SEC) yesterday charged Goldman Sachs $15 million to settle charges that its securities lending practices violated federal regulations. According to the SEC Order, customers frequently ask broker-dealers such as Goldman to locate stock in order to short sell it. Granting that, means that the firm has borrowed, arranged to borrow, or reasonably believes it could borrow the security in order to complete the short sale. The SEC found that Goldman violated securities laws by not providing locates to customers where it had not performed an adequate review of the securities to be located. They also were inaccurately recorded in a firm log. Andrew J. Ceresney, Director of the SEC’s Enforcement Division stated, “The requirement that firms locate securities before effecting short sales is an important safeguard against illegal short selling. Goldman Sachs failed to meet its obligations by allowing customers to engage in short selling without determining whether the securities could reasonably be borrowed at settlement.” The SEC questioned the firm’s lending practices during an investigation in 2013. If you suffered losses with Goldman Sachs, you may be able to recover your losses. Please call our Chicago-based securities law offices to speak to an attorney for free about your options.
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