Goldman Sachs Boosts Compliance Department Amid Regulatory Scrutiny of Industry

Goldman Sachs Group is reportedly adding staff to its compliance department amid increased scrutiny of the industry from the Federal Reserve.

The Wall Street firm plans to enlist several hundred new staffers to address concerns raised by banking supervisors, Bloomberg reported Thursday (Aug. 17).

Goldman Sachs CEO David Solomon has acknowledged the tougher regulatory climate for the industry at large, according to the report.

The fallout from the Archegos Capital Management scandal in 2021 has prompted a closer examination of how all Wall Street banks handle counterparty credit risks, the report said.

Overhauling compliance departments to meet regulators’ expectations can be a time-consuming process, per the report. CEOs of other major banks, such as Wells Fargo and Citigroup, have been focusing on appeasing regulators for years.

Goldman Sachs disclosed in a regulatory filing with the Securities and Exchange Commission (SEC) in May that it was cooperating with and giving information to “various governmental bodies” as they look into the downfall of Silicon Valley Bank.

The filing said that the investigation includes Goldman’s work with the bank “in or around March 2023, when SVB engaged the firm to assist with a proposed capital raise and SVB sold the firm a portfolio of securities.”

Goldman Sachs is bolstering its compliance department even as it has cut executives from other parts of its operations due to a slump in business on Wall Street, according to the Bloomberg report. The decision to ramp up hiring in the compliance department is notable as the company has been reducing its headcount this year due to a market slowdown, with thousands of jobs already cut in previous rounds.

The firm has made three rounds of job cuts, including a few hundred made in September 2022, another 3,200 positions being eliminated in January, and fewer than 250 roles being cut in May. The reductions in May were attributed to a continuing slowdown of investment bank deal-making on Wall Street.

Goldman Sachs said in June that the environment for initial public offerings (IPOs) had improved to nearly its typical level, but the amount of IPO activity was lagging behind and not seeing the same kind of improvement.