Today, the SEC filed a settled administrative proceeding against Goldman Sachs alleging that the firm lacked adequate policies and procedures to address the risk that the firm's analysts were sharing material, nonpublic information about upcoming research changes in weekly "huddles." According to the SEC, the huddles "were a practice where Goldman's stock research analysts met to provide their best trading ideas to firm traders and later passed them on to a select group of top clients."

Under Section 15(g) of the Exchange Act, broker-dealers must adopt, maintain, and enforce policies and procedures designed to prevent insider trading and the misuse of material, nonpublic information. The SEC alleged that although Goldman had policies and procedures in place, they were inadequate for many reasons, including that they

did not properly define what could be discussed at huddles without broad dissemination to all of the firm's clients; 

did not restrict analysts from proposing a trading idea for a specific stock during a huddle when the analyst had already begun drafting a report to change the rating on that stock;

did not involve the presence of compliance personnel at attend "hundreds of huddles;" and

did not identify the hundreds of instances when an analyst discussed a stock at a huddle and then changed the rating within days of the huddle.

Goldman agreed to settle the charges by paying a $22 million penalty, consisting of an $11 million civil penalty to be paid to the Financial Industry Regulatory Authority and an $11 million penalty to be paid to the SEC. Goldman also agreed to accept a censure and a cease-and-desist order, and to review and revise its written policies and procedures to correct the deficiencies identified by the SEC. 

The NY Post reports that the $22 million penalty is not likely to be keeping Goldman exec awake at night, as it "would take Goldman, which posted revenue of $28.8 billion for 2011, seven hours at last year's pace to generate the funds to pay the $22 million fine."