US REGULATORS are investigating Goldman Sachs’s clearing and execution division over possible fraudulent activity, the Wall Street bank revealed last night.
The Commodity Futures Trading Commission (CFTC) is investigating the role Goldman played as a clearing house for a broker-dealer client, and could bring charges against the bank.
The regulator is said to be planning to bring “aiding and abetting, civil fraud and supervision-related charges” against Goldman.
The bank is alleged to have known, or should have known, that the clearing service it provided to its unnamed client was being used improperly.
The broker-dealer is said to have used the accounts of customers, instead of those of its own, in its dealings with Goldman.
The Wall Street giant said it was cooperating with the investigation. It added that the worst-case estimate for all of its legal costs would be $2.7bn (£1.6bn) as of 31 March.
Meanwhile, Goldman said it had lost money on only one day in the last quarter. It added that it had 32 days on which it saw trading gains of more than $100m, compared to 68 over the whole of last year.