Goldman Sachs & Co. will pay $2 million to settle charges of improperly trying to promote initial public stock offerings before they received regulatory approval, the Securities and Exchange Commission announced Thursday.
According to the SEC, traders on Goldman Sachs' New York Asian Shares Sales Desk sent e-mails to institutional investors promoting four IPOs in 1999 and 2000 during the SEC-mandated waiting period between the IPO's registration filing and the SEC's approval. The e-mails contained abbreviated sales pitches, whereas only a full prospectus may be used to promote sales during the waiting period.
In addition, the SEC said a Goldman Sachs official, with the approval of senior management and company lawyers, spoke to the media about one of the IPOs, that of PetroChina Company Ltd., before an IPO registration statement was even filed with the SEC. The official spoke to the press in order to assure investors that proceeds from the IPO would be used in China and not in the Sudan, the SEC said.
The SEC claimed that Goldman's compliance training for its sales staff was inadequate, since it did not specifically outline what could and could not be sent in e-mail.
In agreeing to the $2 million fine, Goldman Sachs did not admit any wrongdoing in the case. However, the SEC noted that the company has tightened its compliance procedures in the aftermath of the case, specifically warning its traders that e-mail statements during pre-filing and waiting periods were not permitted.
Goldman Sachs also reprimanded five people on the New York Asian Shares Sales Desk, the SEC said, and added that their discretionary bonuses were cut anywhere from $10,000 to $25,000 each.
Goldman Sachs spokesman Peter Rose said the company was pleased to put the matter behind it, but had no further comment.