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To: ahhaha who wrote (80222)	12/26/2001 9:28:29 AM
From: long-gone	Respond to of 116931

While on the general topic of derivatives problems: Friday December 21, 5:33 am Eastern Time Goldman gets slap on wrist from Japan watchdog (UPDATE: Recasts with FSA announcement and Goldman comments) TOKYO, Dec 21 (Reuters) - Japan's top financial watchdog said on Friday that it would ban Goldman Sachs Group Inc's (NYSE:GS - news) Japanese unit from trading stocks on its own accounts for 10 days from December 25 to January 11, 2002 as a penalty for breaking securities regulations. ADVERTISEMENT As a part of the penalties, the Financial Services Agency said it would also ban Goldman Sachs (Japan) Ltd from credit derivatives trading for five days from the same date to January 4, 2002 and ordered the firm to improve its management and impose internal penalties for breach of rules. The action reflects a request made earlier this week by the Securities and Exchange Surveillance Commission (SESC) to impose penalties on Goldman Sachs' Tokyo office for violating regulations on creating selling positions, known as short-selling, in 2,368 cases affecting 40 stock issues. Regulators have stepped up surveillance of irregular transactions involving domestic and foreign financial firms to bolster investor confidence and discipline in Tokyo's financial markets. The SESC said that between November 14, 1998 and July 31, 2001, Goldman Sachs conducted a number of short-selling transactions but did not report them as such to the authorities. The latest FSA penalties are the second such punishment for the Tokyo branch of Goldman Sachs. Japan's top financial regulator in June slapped harsh penalties, including suspension of some operations, on French bank Societe Generale Securities and Goldman Sachs for violating government regulations. The Tokyo office of Goldman Sachs was ordered to suspend trading in covered warrants from July 2 to 13 and to halt issuing and offering new covered warrants for a month from June 28. Asked if the latest penalties were too light considering that the company had breached regulations already in the past, an FSA official told reporters, ``we did not acknowledge that the breach was intentional and we also did not confirm the company broke rules on pricing on short-selling.'' Following Friday's announcement, Goldman issued a statement saying that it would take steps to ensure its activities were in full compliance with the laws. ``We would take the order seriously and we will reinforce our internal management and supervision structure to prevent us from making the same mistake,'' a Goldman Sachs spokeswoman said. The SESC said on Wednesday it found the violations after an inspection that was concluded at the end of July. The SESC said Goldman Sachs explained that these transactions were the result of an ``administrative error''. In a bid to avoid illegal short selling which are liable to disrupt trading on the stock market, the FSA also said it has decided to strengthen monitoring of short selling and to request the Japan Securities Dealers Association to require all member securities firms step up their compliance with the rules. As part of the effort to boost transparency, the FSA said the SESC would also reinforce its surveillance through inspections of securities firms. biz.yahoo.com