Goldman Sachs will cash out $36.3 million in fines to settle an allegation that it used illegally leaked materials from the Federal Reserve.
The civil settlement was unveiled on Aug. 3 by the Fed, which claims that a Goldman Sachs executive orchestrated a system to get regulatory secrets and make use of them inside the bank.
According to the charges, the executive tapped into confidential Fed information between 2012 and September 2014. According to the Fed, Goldman's business directly benefited from the leaked confidential data.
Goldman fired the culprit Joseph Jiampietro in 2014, soon after the leak reached the media.
Jiampietro is accused of taking, using and distributing confidential regulatory information such as confidential documents, forthcoming enforcement actions and ratings. The Fed wants the former executive to pay a solid $337,500 fine and to ban him forever from working in the banking industry.
The leak that caused the settlement to take place started with a staffer at the Federal Reserve Bank of New York, Jason Gross. He repeatedly sent out secret info to a former Fed colleague, Rohit Bansal, who was with Goldman Sachs at the time. Bansal was in the same work group with Jiampietro. Both Jiampietro and Bansal were let go in October 2014.
Jiampietro, who began working with Goldman in January 2011, is suing the bank for legal fees in connection with the Fed's case.
Bansal took a guilty plea on account of stealing government property, and can no longer work in the banking industry. The Fed charged him with a $5,000 fine. Gross also pleaded guilty, but his fine was only $2,000.
Goldman pointed out that it is happy to see the issue resolved. According to the bank, as soon as it found out about the leak, it notified the Fed and started to boost its internal checkups and compliance training. The bank deployed its own investigation, which revealed that Bansal was not authorized to receive the materials and Jiampietro should have reported about the leak immediately to his superiors.
"We have no tolerance for the improper handling of confidential supervisory information," a spokesman for Goldman says.
Goldman's financial agreement with the Fed lands after the bank shelled out $50 million last year, in order to settle with the New York State Department of Financial Services (NYDFS). Benjamin Lawsky, the head of NYDFS, warned banks in 2015 against the perils of having sensitive information leaked.
Goldman Sachs acknowledges that it failed to deliver appropriate supervision and training to its employees. As per the settlement, the bank promised to craft an improved program to meet compliance expectations concerning the use and dissemination of confidential supervisory information.
