Goldman Sachs is to pay civil penalty of USD120 million to settle CFTC charges that it attempted, by and through certain of its traders in New York, to manipulate and made false reports concerning the US Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a global benchmark for interest rate products.
Goldman’s unlawful conduct involved multiple traders, including the head of Goldman’s interest rate products trading group in the US, according to the CFTC order.
The CFTC order also requires Goldman to cease and desist from further violations as charged, and take specified remedial steps, including measures to detect and deter trading intended to manipulate swap rates such as USD ISDAFIX, to ensure the integrity and reliability of the bank’s benchmark submissions, and to improve related internal controls.
The order also requires the current supervisor responsible for oversight of various US interest-rate trading desks at Goldman to provide a certification as to, among other things, the effectiveness of the internal controls and procedures undertaken and implemented by Goldman as a result of this settlement.
“This matter, the third enforcement action relating to the ISDAFIX benchmark, demonstrates the breadth of this kind of misconduct across the industry, and within Goldman, the extent of the misconduct across trading desks and product lines,” says Aitan Goelman, the CFTC’s director of enforcement. “The division will continue to be vigilant and aggressive in protecting the integrity of the ISDAFIX and other important benchmarks relied upon by the markets.”
Goldman, through its traders, bid, offered and executed transactions in interest rate swap spreads, US Treasuries, and Eurodollar futures contracts in a manner deliberately designed – in timing, price, and other respects – to influence the published USD ISDAFIX in order to benefit the bank in its derivatives positions, according to the order.
In addition, Goldman, through its employees making the bank’s USD ISDAFIX submissions, also attempted to manipulate and made false reports concerning USD ISDAFIX by skewing the bank’s submissions in order to benefit the bank at the expense of its derivatives counterparties and clients.
