Notification obligations

Firms will be aware of the publicity arising from the fine imposed by the FSA on Goldman Sachs International (GSI). The fine (£17.5m) is the second largest fine imposed in the FSA’s history, although is still dwarfed by the £33.32m J P Morgan fine in June this year (see Regulatory Roundup #16).

Although there is much reference to SEC investigations, Mr Fabrice Tourre and synthetic CDOs – the link to the Final Notice will provide full background details – what is at the heart of the FSA action was the failure of GSI to notify the FSA that an individual holding a controlled function (Mr Tourre was a CF30) had been subject to interest from the SEC.

We are told in SUP 10.13.16 that if a firm becomes aware of information which would reasonably be material to the assessment of an approved person’s fitness and propriety then it must inform the FSA on Form D (‘Notification of changes in personal information or application details’) as soon as practicable.

‘Fitness and propriety’ links to FIT (‘The Fit and Proper test for Approved Persons’).FIT 2.1.3 advises that matters that the FSA will have regard to when assessing a person’s honesty, integrity and reputation includes (3) “whether the person has been subject of, or interviewed in the course of, any existing or previous investigation or disciplinary proceedings, by the FSA, by other regulatory authorities (including a previous regulator), clearing houses and exchanges, professional bodies, or government bodies or agencies” and (4) “whether the person is or has been the subject of any proceedings of a disciplinary or criminal nature, or has been notified of any potential proceedings or of any investigation which might lead to those proceedings”