Goldman Subpoenaed on Huddles
August 27th, 2009Via: Wall Street Journal:
William Galvin, Massachusetts’s chief financial regulator, has subpoenaed Wall Street firm Goldman Sachs Group Inc., demanding information on the firm’s weekly trading huddles between its research analysts and traders.
Mr. Galvin, the Massachusetts secretary of the commonwealth, said he is concerned that the huddles, in which Goldman’s research staff give verbal short-term stock tips to the firm’s traders and then its clients, disadvantage some Goldman customers.
“We have concerns about the research analysts and the efforts under way to use them to secure additional business,” Mr. Galvin said on Wednesday.
The huddles, which were the subject of a page-one article on Monday in The Wall Street Journal, also are being examined by both the Financial Industry Regulatory Authority — the industry self-regulatory body known as Finra — and the Securities and Exchange Commission, according to people familiar with the matter.
Internal documents reviewed by the Journal show that at times, these short-term trading tips differed from Goldman’s long-term research. Critics complain that Goldman’s distribution of the trading ideas to its traders and major clients hurts other Goldman customers who aren’t given the opportunity to trade on the information and may be relying on the firm’s longer-term research to make investment decisions.
