One issue in the Goldman Sachs-ABACUS drama was whether Goldman (NYSE: GS) had an obligation to disclose in timely fashion the fact that it had received a Wells notice. Recall the bank chose not to make such a disclosure to the public or to FINRA, though many thought it should have.

As it turns out, financial firms are required to report Wells notices to FINRA within 30 days. Goldman Sachs missed the deadline by months. The information is posted in a FINRA database, which is searchable by other members. Goldman has been fined for its slow disclosure, though some may scoff at the size of the penalty. 

"Our guidelines provide for sanctions that are remedial, not punitive," a FINRA exec told Reuters. "We understand that the underlying matter was relatively significant." He also said the fine was six times the maximum under FINRA sanction guidelines.

This seems like a lapse on the part of Goldman Sachs. Some might argue the compliance team fell down and didn't notice the lack of disclosure. A darker interpretation would be that Goldman knew it had to disclose the Wells notice receipt but was willing to accept a future FINRA fine--which was sure to be paltry--to keep the matter quiet. It surely would have been seen as explosive news.

For more:
- here's a Reuters article

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