Goldman Sachs fined $650,000 for disclosure failure

WASHINGTON – Industry regulators have fined Goldman Sachs $650,000 for failing to disclose that two of its brokers, including the executive accused of leading the mortgage securities deal that brought civil fraud charges against the firm, were under investigation by the government.

The Financial Industry Regulatory Authority announced the fine Tuesday, saying Goldman lacked adequate procedures to ensure that the required disclosure was made for Fabrice Tourre, a Goldman vice president. Goldman made that report last May, more than seven months after Tourre received a notice from the Securities and Exchange Commission that it was considering filing charges against him, FINRA said.

Goldman’s disclosure on Tourre also came after the SEC filed fraud charges against the Wall Street powerhouse and Tourre in April, FINRA noted.

Goldman settled the charges in July, paying a record $550 million. The case was the most significant legal action related to the mortgage meltdown.

Goldman’s failure to disclose the information about the brokers “impacted the ability of FINRA and other securities regulators to discharge their registration, examination and oversight duties, and limited the ability of investors … to adequately assess the (two) individuals through FINRA’s public disclosure program, BrokerCheck,” James Shorris, FINRA executive vice president and acting chief of enforcement, said in a statement.

In a similar case, Britain’s financial regulator fined Goldman $27 million in September for failing to notify U.K. authorities about the SEC’s investigation. It was the second-largest fine ever imposed by the Financial Services Authority.

Tourre, who was in his late 20s when the deal was made in 2007, was promoted and moved to Goldman’s London office to become executive director of Goldman Sachs International in late 2008.