Goldman Consents to Three-Year Bar On Certain Advisory Work, Settles Leak Case with NY Fed for $50M

Goldman Sachs Group Inc. (GS) will pay a $50M fine to the New York Federal Reserve as part of a settlement over document leaks. The firm also consented to be barred from some advisory work in the state for three years. It admits that it did not properly supervise an employee.

The leak involves former Fed employee Rohit Bansal who worked for Goldman. According to a statement from the New York Department of Financial Services, while there he was assigned to work with a midsized bank as his client. He’d regulated the same bank while at the Fed—this was a bank that the Fed had specifically told him he couldn’t work with until early this year.

Bansal, however, held about 20 meetings with Jason Gross, a former co-worker at the Fed, who purportedly gave him about 35 documents with confidential regulatory information. Bansal is accused of using those documents to assist the Goldman client.

After Goldman management found out about the way he had gotten the confidential information, they fired him and started their own probe. (Meantime, sources tell Bloomberg, the Fed also let go of Gross.)

Bansal had resigned from the Fed in March of last year after took his work Blackberry abroad without permission and falsified records to make it look as if he had not. When Goldman recruited him, he reportedly did not tell them about the terms under which he left the firm and no information about what had happened was available.

Both men are expected to enter guilty pleas to criminal misdemeanor charges.

The case raises questions about the “revolving door” that seems to exist between bank employees and regulator employees, in particular Goldman’s relationship with the New York Fed. In 2013, ex-New York Fed bank examiner Carmen Segarra sued, saying she was terminated from her job because she would not modify findings regarding Goldman’s policy related to conflict of interest. A judge threw out that case contending that she did not allege enough facts under the Federal Deposit Insurance Act’s whistleblower protections.

The SSEK Partners Group is an institutional investor fraud law firm.

Goldman Banker’s Fall Over Fed Leak Started at Peter Luger Party
, Bloomberg, October 28, 2015

Goldman Sachs to pay $50 million over Fed document leak, CNN, October 28, 2015