Between July 2018 & September 2021, Goldman Sachs failed to report, or inaccurately reported, OTC options positions to the LOPR in approximately 1,035,000 instances.
Wut mean?:
- Between July 2018 and September 2021, Goldman failed to report, or inaccurately reported, OTC options positions to the LOPR in approximately 1,035,000 instances,
- FINRA mandates its member firms to report significant options positions to the LOPR.
- The LOPR data helps FINRA spot large options position holders and monitor for potential market manipulation.
- Accurate LOPR reporting is crucial, especially for the OTC options market, due to the lack of an independent data source for regulators....
Wut mean?:
- From July 2018 to September 2021, Goldman's reporting systems overlooked accounts of certain customers acting in unison or under common control.
- Goldman neglected to report around 9,000 OTC options positions in about 35,000 cases and inaccurately reported by missing the "In Concert ID" for roughly 32,000 OTC options positions in around 1,000,000 situations.
Goldman's system for LOPR reporting had automated and manual components.
- The automated system was too narrow, only spotting accounts with characteristics like shared ownership or the same investment advisor.
- The manual system was designed to detect accounts the automated system missed, but this manual check wasn't conducted for institutional investor accounts due to a departmental shift in July 2018.
- This oversight was noticed due to a FINRA inquiry, leading Goldman to revise its manual and automated processes in September 2021.
Penalty?
Why might they do this?
- Mask overexposure to a particular asset...
- Accurate reporting might expose schemes where options are used to manipulate the price of an underlying security, allowing for other forms of exploitation.
- If certain positions are not reported or underreported, it might allow an entity to avoid or delay margin calls if those positions move against them...
- The large positions might necessitate additional capital reserves due to regulations.
- Underreporting can allow an institution to bypass these requirements...
- While the LOPR focuses on options, large options positions (especially put options) in tandem with other trading activities might be indicative of NAKED SHORTING!!!
TLDRS:
- Between July 2018 and September 2021, Goldman failed to report, or inaccurately reported, OTC options positions to the LOPR in approximately 1,035,000 instances,
- FINRA mandates its member firms to report significant options positions to the LOPR.
- The LOPR data helps FINRA spot large options position holders and monitor for potential market manipulation.
- Accurate LOPR reporting is crucial, especially for the OTC options market, due to the lack of an independent data source for regulators....
