• 60 million short sale orders 
• Over 14 billion shares
• Some eight million orders involving over a billion shares,
• 12,335 of the executed orders were executed at or below the national best bid while a short sale circuit breaker was in effect

Few issues attract more heated debate and more vicious online anger than short selling by large market participants. Notably, critics ask where Wall Street's regulators were and what they were doing during times of market stress -- as in when a circuit breaker.

Frankly, when alleged misconduct by the likes of a financial conglomerate such as Goldman Sachs takes place in 2015, 2016, 2017, 2018, and 2019, it's fair to ask just where the hell the market's regulators were during all of those years. It's fair to ask how the industry's regulators contemporaneously missed all the signs and warnings. Finally, we are entitled to ask if there is any justice -- and meaningful regulation -- afoot when it takes some four years after the last alleged year of misconduct to merely settle charges of long-lasting and pervasive non-compliance. Oddly, there's no mention of Goldman Sachs' "extraordinary cooperation" in fixing this mess and responding to FINRA's allegations. See, "FINRA Releases New Guidance on Credit for Extraordinary Cooperation" (FINRA News Release / July 11, 2019)
https://www.finra.org/media-center/news-releases/2019/finra-releases-new-guidance-credit-extraordinary-cooperation

Since 2021, Kathryn Ruemmler, Esq. (Goldman Sachs Group Inc.'s Executive Vice President, Chief Legal Officer, and General Counsel) sits on FINRA's Board of Governors. "FINRA Board Appoints Deborah Bailey and Kathryn Ruemmler as Newest Governors" (FINRA News Release / January 8, 2021)  
https://www.finra.org/media-center/newsreleases/2021/finra-board-appoints-deborah-bailey-and-kathryn-ruemmler-newest. As noted in Ruemmler's online FINRA biography, she is a FINRA Industry Governor / Floor Member Representative, and she serves on FINRA's Nominating & Governance Committee and its Regulatory Policy Committee. And despite all of that, there was no "extraordinary cooperation" from Goldman Sachs noted in the 2023 AWC.

The FINRA Regulatory Policy Committee members (of which Ruemmler is one) serve as the FINRA Regulation, Inc. Board of Directors -- that's no small dual role because that involves the "primary day-to-day responsibility for the regulation, surveillance, examination and disciplining of member firms and registered persons, with respect to market activities as well as other self-regulatory matters." And despite all of that, there was no "extraordinary cooperation" from Goldman Sachs noted in the 2023 AWC. 

None of this is about Ruemmler personally. All of this is about Goldman Sachs and the appropriateness of that firm's General Counsel sitting on FINRA's Board at this moment in time. Again, this blog is not a personal attack against FINRA Governor Ruemmler; but it is an attack against FINRA and its lackluster Board of Governors. The investing public deserves better. The industry deserves better. What we need is advocacy and transparency. We need accountability. We need FINRA to act more like a regulator and less like some trade group on steroids. 

Given Ruemmler's role on FINRA's Board, I believe that it was incumbent upon FINRA to disclose, even if only in a footnote, that Governor Ruemmler had no role in the investigation or settlement aspects of the AWC -- and that FINRA Staff was ordered to have no contact or communication. There is no such disclaimer. Given the facts set out, in this situation with these circumstances, a disclaimer should be a default disclosure.

I note that Governor Ruemmler did not execute the AWC on behalf of Goldman, which is appropriate given my concerns noted above. The Goldman Sachs AWC was executed by "David Markowitz, Global Co-Head of Litigation and Regulatory Proceedings." Of course, Markowitz's signing off on the AWC on behalf of Goldman does not come without conflicts. As reported in part in "Orrick hires Goldman Sachs litigation chief Cafasso" (Reuters by Jonathan Stempel / November 4, 2021)
https://www.reuters.com/legal/legalindustry/orrick-hires-goldman-sachs-litigation-chief-cafasso-2021-11-04/:

Goldman separately on Thursday announced the promotion of two lawyers, David Markowitz and Stephanie Goldstein, to global co-heads of litigation. They will report to Kathryn Ruemmler, the investment bank's general counsel and chief legal officer, according to an internal memo.

Also read: "Sexism On Wall Street: The Cowardly Silence Of FINRA's Board Of Governors" (BrokeAndBroker.com Blog /  November 28, 2022)
https://www.brokeandbroker.com/6770/finra-racism-sexism/

UPDATE/April 10, 2023:

CFTC Orders Goldman Sachs to Pay $15,000,000 for Violations of Swap Business Conduct Standards / Swap Dealer Failed to Disclose Pre-Trade-Mid-Market Marks and Failed to Communicate in a Fair and Balanced Manner (CFTC Release)
https://www.cftc.gov/PressRoom/PressReleases/8685-23
A CFTC Order settled charges against Goldman Sachs & Co. LLC
https://www.cftc.gov/media/8376/enfgoldmanorder041023/download that the firm failed to disclose dozens of pre-trade-mid-market marks (PTMMM), in violation of Regulation 23.431, and failed to communicate to clients in a fair and balanced manner based on principles of fair dealing and good faith, in violation of Regulation 23.433. Goldman admitted that for nearly all “same-day” swaps executed in 2015 and 2016, it either failed to disclose any PTMMM or failed to disclose an accurate PTMMM, and that this conduct violated a CFTC regulation. The CFTC Order imposed a $15,000,000 civil monetary penalty. As alleged in part in the CFTC Release:

The order finds that in 2015 and 2016, Goldman transacted dozens of “same-day” equity index swaps with U.S.-based clients. In a “same-day” equity index swap, the equity leg of the swap strikes on the “same day” as the other material terms of the swap are agreed upon, rather than—as is typical—the day after the date of agreement. The order finds that Goldman failed to disclose to clients the PTMMM of these swaps—often disclosing a PTMMM for a different swap (the analogous “T+1” swap) instead, thereby obscuring the value of the same-day swap.

The order finds that Goldman opportunistically solicited or agreed to enter into same-day swaps only on days and at times that were financially advantageous to Goldman and disadvantageous to its clients. Moreover, the manner in which Goldman communicated to clients caused the same-day swaps to appear more economically advantageous to the clients than they actually were. As found in the order, in certain instances, Goldman disclosed a PTMMM for the “T+1” swap and then bid over it for the “same-day” swap, giving the client the impression that the same-day swap was a better deal for the client than the T+1 swap when, in fact, it was not. Indeed, the order finds any marginal benefit Goldman offered to clients on the interest rate leg of the swap would be outweighed by the cost to clients on the equity leg when transacting “same day.” The order finds that Goldman failed to communicate in a fair and balanced manner by touting the supposed benefits of same-day swap transactions, but not the corresponding costs.

Bill Singer's Comment: As in this is 2023 and the misconduct took place in 2015/2016 -- as in seven to eight years ago.  What took so long? (Don't bother to answer: That's both a rhetorical and cynical question).