FINRA Fines Barclays, Goldman, Merrill - Analyst Blog

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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. ( GS ), Barclays PLC ( BCS ) and Merrill Lynch, Pierce, Fenner & Smith, Inc. of Bank of America Corp. ( BAC ). 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. ( BOFI ), with a Zacks Rank #1 (Strong Buy).


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BARCLAY PLC-ADR (BCS): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

BANK OF AMER CP (BAC): Free Stock Analysis Report

BOFI HLDG INC (BOFI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BCS , GS , BAC , BOFI

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