Goldman Sachs agreed to pay $650,000 to settle FINRA charges that it failed to update Form U-4 for 2 of its RR's, including Fabrice Tourre, who had received formal notices saying they were the subjects of SEC investigations.  Tourre's "Wells Notice" was issued in connection with the SEC's investigation of an offering of the synthetic collateralized debt obligation "ABACUS 2007-ACI."  

Firms are required ... to update a Rep's Form U4 when that individual receives a Wells Notice - doing so within 30 days of learning of the Notice.  Goldman didn't amend Tourre's Form U4 until 5/3/10 - more than 7 months after Goldman learned he had received the Wells Notice, and only after the SEC filed a complaint against Goldman and Tourre on 4/16/10.  

Individuals at Goldman reportedly were promptly informed of the receipt of the Wells Notices by outside counsel for both employees, but they subsequently failed to notify the Goldman compliance unit charged with updating Forms U4.  The second registered individual subsequently was not named in an SEC complaint.

And, of course, Goldman's supervisory procedures and systems were found to be deficient, the WSP's inadequate.

Take-Away:  FINRA points out that, "Nowhere did [Goldman's] procedures and policies mention 'Wells Notices' specifically and the need to make disclosure when one was issued.'  A good point by FINRA - it's not an everyday event so it could easily be overlooked.  However, it's likely that Goldman's WSP was adequate in this regard - keeping it appropriately brief by using the term "Form U-4 reportable activities and events," instead of enumerating every such activity and event. 

Conclusion:  Be specific, where practicable, and brief, where possible.  Brevity is good, so long as one does not sacrifice accuracy and completeness. 

As part of the settlement, Goldman also agreed to review its supervisory procedures and systems in the reporting area and to implement and document any necessary remedial measures.   [FINRA News, 11/9]