The China Securities Regulatory Commission (CSRS) agreed with Goldman Sachs under guidelines that allow it to negotiate a settlement rather than to simply issue a fine.
Wednesday 24, April 2019
(Bloomberg) --Goldman Sachs Group will pay $22 million to settle allegations by China’s securities regulator over how the Wall Street firm interacted with its local joint venture, the first such agreement under pilot rules the nation adopted in 2015.
The deal relates to how Goldman Sachs’s Asia unit worked with the company’s onshore joint venture on its trading business.
In a statement, the CSRC said that employees at both entities have agreed to step up internal controls.
The settlement underscores Chinese regulators’ willingness to use new approaches to supervision as they increase scrutiny of financial markets. Fines and confiscations levied by the CSRC reached a record $1.59 billion last year.
Melody Yang, a Beijing-based partner at Simmons & Simmons, said, “This case represents a major breakthrough in the history of China’s securities regulatory and administrative law enforcement, we expect this approach will be more widely accepted by the market.”
“We are pleased to have resolved the matter,” a spokeswoman for Goldman Sachs said.
According to the CSRC, between October 2013 and July 2015, traders at Goldman Sachs’s Asian unit used Goldman Sachs Gaohua Securities’ accounts to carry out trades and provided business guidance to the joint venture’s staff.
Additionally, CSRC stated that the two parties engaged in other related stock and stock index futures contract transactions during four trading days from May to July 2015.
During those three months, the Shanghai Composite Index slumped 18 per cent as turmoil gripped Chinese markets.