Fed Orders Goldman Sachs to Pay $36M Fine Over Confidential Documents Leak

Goldman Sachs Group Inc. (GS) will pay $36.3M to settle allegations accusing ex-employees of obtaining access to confidential documents from the Federal Reserve. The Fed contends that Joseph Jiampietro, while working as a Goldman Sachs managing director, obtained the unauthorized supervisory data belonging to bank regulators and utilized the information for his work at the financial firm.

The Fed said that ex-Goldman Sachs banker Rohit Bansal was the one who shared the confidential documents with Jiampietro. Bansal had gotten the documents from his friend Jason Gross, a New York Fed employee that he used to work with at the regulatory agency. The confidential data involved a bank that was a client of Goldman Sachs. Last year, Bansal pleaded guilty to a misdemeanor charge involving the Fed documents, while Gross pleaded guilty to giving Bansal the information.

The Fed believes that Jiampietro used the confidential information to make pitches to potential and current clients. A lawyer for Jiampietro, who had previously worked for UBS Group Ag (UBS) and JPMorgan Chase & Co. (JPM), maintains that the allegations against his client are “demonstrably false.”

Jiampietro maintains that he never asked anyone for confidential supervisory information, nor did he use said information to benefit him or anyone else. Last week, he filed a lawsuit against Goldman Sachs accusing his former employer of not paying at least $350K in legal fees that he incurred in the government probe into the Fed documents.

As part of the settlement, Goldman Sachs will remedy flaws in its policies so that confidential document leaks don’t happen in the future. The firm will have to set up an improved program to fulfill compliance expectations around issuing and using secret supervisory information and it cannot re-hire individuals previously linked to improper disclosures.

It was last year that Goldman Sachs agreed to pay the New York Department of Financial Services $50M to settle allegations related to Rohit Bansal and his improper sharing of confidential government and regulatory data from the Fed. About 35 documents were wrongfully shared.

Bansal had previously been asked to step down from the New York Fed for a number reasons, including bringing his work Blackberry abroad without getting authorization first and trying to falsify records to appear as if he had gotten the authorization, as well as taking part in communications that were unauthorized with the Federal Reserve Board. Despite all of this, Goldman Sachs hired Bansal pairing him with a client that he had examined when he used to work for the regulator.

As part of this latest settlement, Goldman admitted that one of its employees took part in criminal theft of the confidential supervisory data and acknowledged that its management did not effectively supervise the employee to make sure such a theft didn’t happen. Goldman said that it did not put into place and keep up procedures and policies that were adequate enough over post-employment restrictions involving ex-government employees. The firm agreed to put into place a number of reforms to make sure that, under New York banking law, compliance and proper use of confidential regulatory information occurs from now on.

It was last year that Goldman Sachs agreed to pay the New York Department of Financial Services $50M to settle allegations related to Rohit Bansal and his improper sharing of confidential government and regulatory data from the Fed. About 35 documents were wrongfully shared.

Bansal previously had been asked to step down from the New York Fed for a number reasons, including bringing his work Blackberry abroad without getting authorization first and trying to falsify records so it would appear as if he had gotten the authorization, as well as taking part in communications that were unauthorized with the Federal Reserve Board. Despite all of this, Goldman Sachs hired Bansal pairing him with a client that he had examined when he used to work for the regulator.

As part of this latest settlement, Goldman admitted that one of its employees took part in criminal theft of the confidential supervisory data and acknowledged that its management did not effectively supervise the employee to make sure such a theft didn’t happen. Goldman said that it did not put into place and keep up procedures and policies that were adequate enough over post-employment restrictions involving ex-government employees. The firm agreed to put into place a number of reforms to make sure compliance and proper use of confidential regulatory information occurs from now on under New York banking law.

It was last year that Goldman Sachs agreed to pay the New York Department of Financial Services $50M to settle allegations related to Rohit Bansal and his improper sharing of confidential government and regulatory data from the Fed. About 35 documents were wrongfully shared.

Bansal previously had been asked to step down from the New York Fed for a number reasons, including bringing his work Blackberry abroad without getting authorization first and trying to falsify records so it would appear as if he had gotten the authorization, as well as taking part in communications that were unauthorized with the Federal Reserve Board. Despite all of this, Goldman Sachs hired Bansal pairing him with a client that he had examined when he used to work for the regulator.

As part of this latest settlement, Goldman admitted that one of its employees took part in criminal theft of the confidential supervisory data and acknowledged that its management did not effectively supervise the employee to make sure such a theft didn’t happen. Goldman said that it did not put into place and keep up procedures and policies that were adequate enough over post-employment restrictions involving ex-government employees. The firm agreed to put into place a number of reforms to make sure compliance and proper use of confidential regulatory information occurs from now on under New York banking law.

The SSEK Partners Group is a securities fraud law firm.

Fed fines Goldman Sachs $36M in document leak, Boston Globe, August 4, 2016

Goldman Sachs to Pay $50M Fine, Admit Failure to Supervise Over Fed Breach, Forbes, October 28, 2015