2013 Options Trade Error Cost Goldman Sachs $7 Million

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2013 Options Trade Error Cost Goldman Sachs $7 Million

Back in August of 2013, Goldman Sachs had just installed a new software system to assist in determining the prices at which the firm would buy or sell options. They thought they had worked out the kinks, but one morning the software sent out 16,000 mispriced options orders in less than an hour. The options market kicked into high gear when this flood of orders hit, causing huge downward moves in many options series.

The investigation determined that in fact a Goldman employee mistakenly intervened to override safeguards the firm had in place to prevent these kind of rogue orders.

The SEC announced on Tuesday evening that they had reached a $7 million settlement with Goldman regarding the matter. The agency noted that Goldman Sachs lacked the proper safeguards to prevent these kind of erroneous orders from occurring. A part of the settlement, the megabank and brokerage agreed to revamp its options ordering operations

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