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From October 2015 to April 2018, Goldman mismarked around 60
million short sale orders totaling more than 14 billion shares
as "long" sales, with nearly eight million of those orders,
totaling more than a billion shares, being executed, FINRA said.
The mismarked orders were caused by the failure to add a single
line of computer code during an upgrade to automated trading
software Goldman used to simplify its order flow, FINRA said.
Because they were inaccurately marked as "long," 12,335 of the
executed orders were executed at or below the best displayed
price available while a short sale circuit breaker was in
effect, FINRA said. Short sale circuit breakers prohibit the
execution or display of a short sale in that security at a price
that is less than or equal to the current national best bid.
The orders, which represented less than 1% of Goldman's total
principle sell orders during the period, were auto-generated to
hedge Goldman's Synthetic Product Group's synthetic risk
exposure resulting from its execution of equity swap
transactions with clients, FINRA said.
The mismarked orders also caused Goldman to submit inaccurate
trade reports to FINRA and maintain inaccurate books and
records, the regulator said.
Goldman also failed to establish and maintain a supervisory
system reasonably designed to achieve compliance with short sale
regulations SHO and rules relating to accurate trade reporting,
FINRA said.
Goldman accepted and consented to FINRA's findings without
admitting to or denying them.
(Reporting by John McCrank; Editing by Chizu Nomiyama)
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