The U.S. Commodity Futures Trading Commission (CFTC) has settled charges against The Goldman Sachs Group, Inc., and Goldman, Sachs & Co. for manipulating the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a key global benchmark for interest rate products. The alleged misconduct occurred between January 2007 and March 2012.
According to the CFTC order, Goldman Sachs traders in New York attempted to manipulate the USD ISDAFIX rate “on many occasions” through trading in interest rate swap spreads, U.S. Treasuries, and Eurodollar futures contracts. The firm allegedly timed, priced, and executed these transactions specifically to influence the published benchmark rate, benefiting its own derivatives positions. Additionally, Goldman employees making the Bank’s USD ISDAFIX submissions are accused of skewing those submissions to benefit Goldman at the expense of counterparties and clients.
The CFTC’s investigation revealed the misconduct involved multiple traders, including the head of Goldman’s Interest Rate Products Trading Group in the United States. This case marks the third enforcement action by the CFTC related to the ISDAFIX benchmark, highlighting a pattern of manipulative behavior within the industry.
As a result of the settlement, Goldman Sachs will pay a $120 million civil monetary penalty. The firm is also required to cease and desist from further violations and implement remedial steps to prevent future manipulation. These steps include enhanced detection and deterrence measures, improved internal controls, and a certification from the supervisor responsible for U.S. interest-rate trading desks regarding the effectiveness of these controls.
The USD ISDAFIX rate is a widely used benchmark for valuing and settling interest rate swaps and related derivatives. It was, during the period in question, utilized in the settlement of exchange-traded futures contracts and the calculation of various financial products. Aitan Goelman, the CFTC’s Director of Enforcement, stated the Division will remain “vigilant and aggressive” in protecting the integrity of the ISDAFIX and other vital benchmarks.
Source: CFTC.gov
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