In another blow to Goldman Sachs (GS), a FINRA arbitration panel has ruled that the firm must pay $20.6 million to scammed investors who charged that it should have known about the Ponzi scheme pulled off by the collapsed Bayou Hedge Funds. The claim was lodged against Goldman Sachs Execution & Clearing unit, which was known as Spear Leeds & Kellogg before it was bought by the gilded bank.

Recall that Bayou collapsed in 2005, after the firm's CEO Samuel Israel III admitted he lied about the company's profits. He then tried to fake his own suicide and led police on quite a manhunt.

Goldman Sachs said all along that the defrauded investors were "highly sophisticated," sort of like it did in the ABACUS case. Goldman also maintained "it never controlled the funds in question or offered investment advice to Bayou, but merely processed the trades made by Bayou," notes the AP.

There is merit to that position. It raises a good question: should execution and clearing firms be monitoring performance against the marketing claims of the client? They may want to start. 

For more:
- here's the article

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