Notice of Disciplinary Action against Goldman, Sachs & Co.
LLC, Member Organization
To:Members, Member Organizations, Participants and Participant Organizations

From:

Joseph Cusick, Chief Regulatory Officer, NASDAQ PHLXSMDATE:July 12, 2017

Enforcement No. 2017-12
FINRA Nos. 20140435659 et al
On June 26, 2017, the Business Conduct Committee (the “Committee”) of the NASDAQPHLX LLC (“PHLX” or the “Exchange”) issued a disciplinary decision against Goldman,
Sachs & Co. LLC (“Goldman” or the “Firm”), a member organization of the Exchange. In
response to a Statement of Charges issued in this action, Goldman submitted an Offer ofSettlement (“Offer”). Solely to settle this proceeding, and without admitting or denying
the charge, Goldman consented to findings that during the periods between January 19,
2010 and January 20, 2015, and between May 7, 2015 and January 16, 2016 (collectively,
the “Review Period”), Goldman violated Exchange Rules 1003, 748(g) (for the period priorto November 23, 2012), 748(h) (for the period on and after November 23, 2012), and707. Specifically, Goldman consented to findings that the Firm had failed to report andhad inaccurately reported options positions to the Large Options Positions Report (“LOPR”)
during the Review Period and had failed to establish, maintain and enforce written
supervisory procedures (“WSPs”) and a supervisory system that were reasonably designed
to ensure compliance with its LOPR obligations under Exchange rules.
With respect to its compliance with LOPR-related rules, Goldman consented to findingsthat it had: (i) failed to report options positions to the LOPR in 110,220 instances after its
LOPR logic had failed to recognize the symbols of certain underlying securities that had
been reclassified as “units” following a corporate action, such as a re-organization, and toreport the options on such securities to the LOPR; (ii) failed to report three options
positions to the LOPR when it inadvertently caused “delete” records instead of “modify”
records to be submitted to the LOPR; (iii) over-reported options positions to the LOPR in
14,166 instances, and under-reported options positions to the LOPR in 6,354 instances,when it mistakenly suppressed “delete” records from the LOPR that should have beenreported; and (iv) failed to report or had inaccurately reported 3,161 options positions tothe LOPR in an unknown number of instances when a technical flaw in its LOPR systemcaused stale data concerning early options exercises and assignments to be downloaded
to the LOPR system instead of undated data.
Goldman also consented to findings that its WSPs and supervisory system were
inadequate to achieve compliance with the rules governing the reporting of options
positions to the LOPR system. Specifically, they had failed to provide for: (i) identificationof accounts for potential acting-in-concert activity; (ii) a comparison of positions on theFirm’s books and records with the positions reflected on the Options Clearing

Corporation’s snapshot; (iii) the proper handling of “delete” records; and (iv) reviews ofrejected LOPR positions. Furthermore, the Firm’s WSPs did not adequately set forth whatsteps were to be taken in connection with its LOPR-related reviews, or the frequency ofsuch reviews.
The Committee found that Goldman had violated Exchange Rules 1003, 748(g), 748(h),and 707, and ordered the imposition of the following sanctions against Goldman: (i) acensure; (ii) a total fine in the amount of $2,500,000, of which $250,000 shall be paid tothe Exchange; and (iii) an undertaking, pursuant to which the Firm shall: (a) addresscertain LOPR deficiencies and implement controls and procedures that are reasonably
designed to achieve compliance with the rules and regulations cited in the Offer; and (b)within 90 days the Decision becomes final, submit a written statement from a senior
management executive of the Firm: (i) referencing this matter; (ii) representing that theFirm has revised its WSPs to implement the controls and procedures referenced above
and, for those deficiencies requiring technology and/or system changes, has implemented
such changes; and (iii) referencing the date(s) of completion.
For more information, contact:

Joseph Cusick, Chief Regulatory Officer, NASDAQ PHLX, at +1 215 496 1576.

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