Legal woes for the U.S. banking barons seem endless. The latest
in the string is a fine of $1 million each slapped on
The Goldman Sachs Group, Inc.
) and Merrill Lynch, Pierce, Fenner & Smith, Inc. of
Bank of America Corp.
). The fine has been levied by the Financial Industrial Regulatory
Authority (FINRA) for submitting inaccurate and incomplete "blue
sheet" data to various regulatory authorities.
On investigation, the FINRA found that these firms used faulty
electronic systems to update their "blue sheet" data and also
lacked proper audit system to account for the submissions.
Apart from paying the fine, all three firms will have to conduct a
comprehensive review of their systems and certify the same to the
FINRA. The firms will have to undertake procedures and corrective
measures to avoid the recurrence of similar mistakes in the future.
Goldman, Barclays and BofA have agreed to pay the fine, but did not
accept or reject the charges. Separately, the FINRA has also lodged
a complaint against Wedbush Securities, Inc. for similar reasons.
The regulatory authority may seek information about a particular
security or a transaction, if suspected illegal or ambiguous. This
information or the "blue sheet" data enables the regulatory
authorities like the FINRA to gauge the presence of illegitimate
insider trading or other forms of market abuse. Therefore, the
timely submission of accurate data is crucial as it aids
controlling market manipulation.
Currently Goldman carries a Zacks Rank #3 (Hold), while both BofA
and Barclays hold Zacks Rank #5 (Strong Sell). Other banking stock
worth considering include
BofI Holding, Inc.
), with a Zacks Rank #1 (Strong Buy).
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BARCLAY PLC-ADR (BCS): Free Stock Analysis
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