Goldman Sachs hit with £17.5m FSA fine

Wall Street giant Goldman Sachs has been fined £17.5 million for failing to tell UK regulators that the group was under investigation for fraud by the US financial watchdog this summer.

The fine is one of the biggest ever imposed by the Financial Services Authority (FSA), and follows a five-month enquiry triggered by the US charges. These centred around allegations that Goldman misled investors in a complex mortgage-backed security called Abacus.

Goldman agreed to settle civil fraud charges in the US in July, paying a fine of $550m (355.5m) to the Securities & Exchange Commission. As part of the deal, Goldman neither admitted nor denied any wrongdoing.

Its problems in the UK were not linked directly to Abacus, but rather to what the FSA described as "weakness" in Goldman's reporting controls. Although Goldman did not set out to hide anything, the UK regulator said the group failed to provide "appropriate information".

This included notification that one of Goldman's employees, Fabrice Tourre, was under investigation in the US. Tourre, a French banker, was involved in marketing Abacus back in 2007. Although he moved from New York to work in London while the US probe was ongoing, Goldman failed to notify UK regulators of the situation.

The fine is the latest in a string of large levies to be issued by the FSA. The largest was in June, when JP Morgan was fined 33.3m for failing to separate client money from its own.