Goldman agrees to settlement with China watchdog

BEIJING • Goldman Sachs Group Inc agreed to pay part of US$22 million (RM90.86 million) to settle allegations by China’s securities regulator over how the Wall Street firm interacted with its local joint venture (JV) partner, the first such agreement under pilot rules the nation adopted in 2015.

The China Securities Regulatory Commission (CSRC) agreed with Goldman under guidelines that allow it to negotiate a settlement rather than to simply issue a fine.

The deal relates to how Goldman’s Asia unit worked with Beijing Gao Hua Securities Co Ltd, the majority owner of the onshore JV, on its trading business. Employees at both firms have agreed to step up internal controls, the CSRC said in a statement late on Tuesday.

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 US$1.59 billion last year, according to official data.

“This case represents a major breakthrough in the history of China’s securities regulatory and administrative law enforcement,” said Melody Yang, a Beijing-based partner at Simmons & Simmons.

A total of nine parties, including Goldman and Beijing Gao Hua, will pay 150 million yuan (RM91.5 million) to settle the case, according to the CSRC notice. It didn’t identify the rest.

“We are pleased to have resolved the matter,” a spokeswoman who represents Goldman and Beijing Gao Hua said. — Bloomberg