Goldman Sachs agreed to pay $120 million in penalties to settle CFTC charges that the firm attempted, by and through certain of its traders in New York, on many occasions to manipulate and followed by making false reports concerning the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a global benchmark for interest rate products.

CFTC FINDINGS.    From January 2007 through March 2012, Goldman attempted to manipulate USD ISDAFIX through its trading at the 11:00 a.m. fixing as well as by skewing the Bank’s submissions, in order to benefit a range of derivatives positions held by Goldman that were priced or valued against the USD ISDAFIX benchmark.

As captured in emails and audio recordings, when Goldman had derivatives positions settling or pricing against USD ISDAFIX, Goldman traders discussed their intent to move USD ISDAFIX in whichever direction benefitted their positions. Goldman traders stated their manipulative goals in plain language, such as directing their swap broker to “spend what you need, but make SURE we get the print,” and even objected when their attempts to manipulate were not performed as inexpensively as possible, such as when the former head of Goldman’s swap trading desk complained, “I should control the screen without having to given [sic] some loser another [trade].”

The CFTC further noted that prior to the latter stages of the Division’s investigation, Goldman’s cooperation was not satisfactory. Goldman did not make certain productions as expeditiously as the Division expected and initially failed to produce certain communications and documents that were potentially relevant to identifying misconduct. The Order recognizes that Goldman took remedial action to improve internal controls and policies related to ISDAFIX and its successor benchmark.

In addition to paying a $120 million civil penalty, Goldman must take specified remedial steps to:

• detect and deter trading intended to manipulate swap rates such as USD ISDAFIX;
• ensure the integrity and reliability of the Bank’s benchmark submissions;
• improve related internal controls; and
• the current desk supervisor of U.S. interest-rate trading desks must certify as to the effectiveness of the internal controls and procedures.