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Goldman pays $10 million to settle research complaints

June 9, 2011 |  1:29 pm

Goldman Sachs has agreed to pay $10 million to settle charges that it gave select clients preferential access to trading ideas from its analysts.

The Massachusetts state security regulator said in a consent order that Goldman broke rules prohibiting the "selective disclosure of unpublished research" and in doing so "engaged in dishonorable or dishonest conduct contrary to high standards of commercial conduct."

According to the order, starting in 2006 Goldman encouraged its traders to have so-called "huddles" with research analysts in which the analysts provided short-term trading ideas that they did not publish. The traders are then alleged to have passed along this advice to some clients -- but not to others.

The bank split clients into four tiers, and only the top two tiers, which included hedge funds and asset managers, would receive the information, according to the order. The lower tiers included state pension funds.

The problems occurred after an earlier investigation into the way Wall Street's analysts distributed their information, which led to a 2003 settlement between a number of banks and securities regulators.

Goldman did not admit to any wrongdoing in accepting the settlement.

"We are pleased to have resolved this matter with the Massachusetts securities division," a spokesman for the firm said Thursday.

-- Nathaniel Popper

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