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Goldman Fires Bankers After Getting Confidential Fed Info

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Goldman Sachs Group Inc. fired two bankers after one of them allegedly shared confidential documents from the Federal Reserve Bank of New York within the firm.

A junior banker, who had joined the company in July from the New York Fed, was dismissed a week after the discovery in late September along with another employee who failed to escalate the issue, according to an internal memo obtained by Bloomberg News that didn’t identify the pair. Jake Siewert, a bank spokesman, confirmed the contents of the memo, which was prompted by a report yesterday in the New York Times.

“We have zero tolerance for improper handling of confidential information,” Goldman Sachs said in the memo. “We are reviewing our policies regarding any hiring from governmental institutions to ensure that they are appropriately effective and robust.”

The bank and the New York Fed have faced questions about their relationship since a former examiner, Carmen Segarra, said her ex-colleagues at the regulator were too deferential in their oversight of the New York-based firm. She gave what she said were secretly recorded conversations with those co-workers to the radio program “This American Life” in September.

U.S. Senator Sherrod Brown, an Ohio Democrat, scheduled a hearing for tomorrow before his banking subcommittee on “regulatory capture” following Segarra’s claims. On the same day her recordings became public, Goldman Sachs changed its policy addressing conflicts of interest to bar investment bankers from trading individual stocks and bonds.

‘Not Perfect’

The banker, Rohit Bansal, forwarded an e-mail from Fed employee Jason Gross that contained confidential supervisory information to members of his team on Sept. 26, according to a person briefed on the matter. An investigation indicated that a more senior banker, Joseph Jiampietro, had earlier received inappropriate information from Bansal, said the person, who asked not to be identified discussing private matters.

“Mr. Jiampietro never knowingly or improperly reviewed or misused confidential supervisory information,” his lawyer, Adam Ford, said in a statement. “He should not have been terminated. Any compliance failings regarding Mr. Bansal had nothing to do with Mr. Jiampietro.”

The New York Fed also dismissed Gross for sharing information with Bansal, according to two people briefed on the matter.

‘Zero Tolerance’

Sean Casey, Bansal’s lawyer at Kobre & Kim LLP, declined to comment through a spokeswoman. Bruce Barket, a lawyer representing Gross, said that Gross no longer works at the New York Fed and said his client is cooperating with an investigation led by the U.S. Attorney’s office in the Southern District of New York.

The New York Fed said in a statement that it has “zero tolerance” for personnel who don’t safeguard confidential information.

“We have detailed rules and controls protecting confidential information,” according to the statement. “We also know that we are not perfect, that information today is more difficult to safeguard, and we are resolute to learn from our experiences.”

The incident arose after the junior banker sent a document to a senior member of the financial institutions group within the firm’s investment bank, who then immediately alerted the compliance department, according to the company memo. The records included information on at least one of Goldman Sachs’s clients, a mid-size bank overseen by the regulator, according to the Times.

General Counsel

Goldman Sachs’s general counsel alerted the New York Fed’s top lawyer the day the information was shared, and the firm notified other regulators within days, according to the memo.

Ties between Goldman Sachs and its regulators include New York Fed President William Dudley, who was chief economist at the firm until 2005. Stephen Friedman, who was chairman of the New York Fed’s board, quit that job in 2009 to avoid the appearance of a conflict-of-interest with his role at the time as a Goldman Sachs director.


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