ASX Fines Goldman $50K For Breach of Client Money
The ASX Disciplinary Tribunal (the ‘Tribunal’) has imposed a fine of $50,000 (plus GST) on Goldman Sachs Australia Pty Limited (‘GSA’) for failing to ensure that client monies were treated in accordance with requirements of ASX Market Rules and the Corporations Act.
The circumstances involved contraventions of the following:
a) ASX Market Rule 7.11.1* – A Market Participant must comply with the relevant provisions of the Corporations Act governing the keeping and treatment of money paid, or property given, to the Market Participant in connection with services rovided to, or products held by, clients of the Market Participant in respect of their business.(‘Contravention 1’); and
b) ASX Market Rule 7.11.10* – A Market Participant must perform reconciliations that are accurate in all respects. (‘Contravention 2’).
GSA elected not to contest the contraventions before the Tribunal.
The circumstances of the matter are detailed as follows:
GSA was in breach of s 981B of the Act as:
* On 4 November 2009 GSA’s bank incorrectly credited interest of $78.23 into its clearing account. This error by GSA’s bank was identified by GSA on the following day, as a result of its reconciliation process. GSA informed the bank of the error and the transaction was promptly reversed on the day after the error occurred;
* On 31 December 2009, GSA’s bank incorrectly debited $20 of client money from trust accounts on two occasions. These errors by GSA’s bank were identified by GSA on the following day, as a result of its reconciliation process. GSA informed the bank of the errors and the transactions were promptly reversed on the day after the errors occurred;
* On 18 and 19 January 2010 three payments of client monies received one day in advance of settlement of a cash market product transaction (and totaling $105,443.89) were paid into a house account operated by GSA instead of a trust account; and
* In a five week period between March and April 2010, client monies in the form of interest in the sum of $5,405 were paid into a house account in error.
GSA performed the reconciliations in accordance with the time and form required by Market Rule 7.11.10 and the corresponding Procedures. However, by not including a process by which GSA could manually (if necessary) identify all transactions to ensure that the client monies were treated in accordance with requirements of the Market Rules and the Act, GSA did not perform the reconciliations in a manner which would identify all of the alleged breaches as particularised above. Accordingly, the reconciliations were not accurate in all respects
In determining penalty, the Tribunal took into account a number of matters, including the following:
a) the misconduct was self-reported in a timely and comprehensive manner; No: 016/12
b) GSA fully co-operated with ASX in relation to the conduct of its investigation into the contraventions;
c) GSA agreed at the earliest opportunity not to contest the contraventions;
d) the misconduct was unintentional and in a number of cases the misconduct was the responsibility of an unrelated third party;
e) at no stage was any market transaction not enabled because of the misconduct;
f) there was no commercial advantage or financial benefit obtained as a result of the misconduct;
g) there were no losses suffered by clients, or compensation claims or complaints made by clients in relation to the contraventions;
h) GSA has promptly implemented remedial measures to seek to prevent any recurrence of the contravening conduct;
i) GSA has previous disciplinary history, notwithstanding that GSA has no previous disciplinary history regarding the matters relevant to the misconduct;
j) the misconduct involved several breaches over a six month period; and
k) the relevant conduct had the potential to damage the reputation and integrity of ASX and the market and facilities it operates.