Goldman Sachs? business proceedings with Muammar Gaddafi?s reign have come under surveillance from U.S. regulators investigating whether they broke anti-bribery laws.
Major investment banking group Goldman Sachs has been fined $10million for tipping off favoured clients with trading ideas.
The group was impugned with breaching state law in Massachusetts by dealing in ‘trading huddles’, where it would give priority clients tips which could have been antithetic with research published publicly by the bank.?As well as accepting the fine, the investment banking company has also agreed to stop the practice, which has been labelled ‘unfair’ and ‘preferential’ by critics.
Goldman research analysts and traders began holding ‘huddles’ in 2006, in which they discussed short-term, ad hoc trading ideas. Analysts were expected to envisage and follow ‘rules of the road’, which subsumed a ban on ‘selective disclosure’ of possible changes in stock ratings, earnings forecasts and share price targets. But by 2009, Goldman ranked clients into four tiers and enabled those in the top two tiers get calls in which analysts discussed ideas from the huddles.
The investment banking giant made the offer of a $50m (?31m) payment, which would have gone to the son-in-law of the state oil company boss, according to reports last week. Now it has emerged that the US Securities and Exchange Commission (SEC) is inspecting documents related to the plan.
The payment was proposed at intractable dialogue between Goldman and the Gaddafi administration’s sovereign wealth fund, the Libyan Investment Authority (LIA), which was established to invest hundreds of billions of dollars of oil revenues.
The LIA had given Goldman $1.3bn to make complicated currency bets and other derivative and inferential investments, but the bank had lost 98% of the Libyan money when those bets turned spectacularly wrong.
Regulators are investigating whether Goldman Sachs violated bribery laws in dealings with the sovereign wealth fund in Libya, it has been reported. The bank is said to have agreed to pay the Libyan Investment Authority, which is controlled by the nation’s leader, Colonel Gaddafi, a $50 million fee before violence erupted in the country earlier this year.
Although the payment never went through, this does not exempt the bank from the federal Foreign Corrupt Practices Act, which bans U.S. companies from offering or paying bribes to foreign state-owned companies.
?We are confident that nothing we did or proposed could have been a breach of any rule or regulation,? Goldman spokesman Lucas Van Praag told the Wall Street Journal.