Goldman Sachs Fined By Mass., Told To End 'Huddles'
Massachusetts regulators have fined Goldman Sachs & Co. $10 million and ordered the investment firm to stop its policy of favoring certain clients over others.
In a settlement announced Thursday by Secretary of State William Galvin's office, Goldman Sachs also agreed to stop internal meetings held among equity research analysts and traders, referred to by the company as "huddles."
Galvin said Goldman Sachs adopted a tiered system of ranking clients, with only top-tiered clients receiving calls from senior analysts with information discussed in the huddles.
The system excluded some Massachusetts pension funds from receiving calls or easily accessing Goldman Sachs research.
"They provided what we regard as insider information regarding certain stocks to preferred customers and denied that information to other customers of theirs," Galvin said.
The investigation found such practices to be "dishonest and unethical," but not fraudulent.
"We hope that this particular approach will go out," Galvin said, "but we will remain vigilant to make sure that any effort to make the market unfair to average investors will be dealt with."
A spokesman for Goldman Sachs said the firm was pleased to have resolved the matter.
With reporting from The Associated Press and the WBUR Newsroom
This program aired on June 9, 2011. The audio for this program is not available.