Goldman Sachs agreed to pay a fine of US $36.3 million to resolve charges brought by the Board of Governors of the Federal Reserve System (FRB) that it failed to maintain adequate policies and procedures to detect or prevent the unauthorized use and dissemination of confidential information of the FRB. This matter arose as a result of the illegal obtainment and use of confidential Fed information by Rohit Bansal, a former Goldman Sachs employee hired from the New York Federal Reserve Bank, which he obtained from Jason Gross, a former co-worker of Mr. Bansal’s at the FRB. The FRB claimed that Mr. Bansal subsequently shared the confidential information with other Goldman Sachs employees, including Joseph Jiampietro, a former managing director. Previously, Goldman Sachs agreed to pay a fine of US $50 million to the New York State Department of Financial Services related to this matter, and Mr. Bansal and Mr. Gross each pleaded guilty to criminal charges. Among other things, alleged the FRB, Goldman Sachs “failed to monitor electronic mail for documents containing confidential supervisory information [from the FRB].” Goldman Sachs agreed to adopt and implement enhanced procedures related to its monitoring of potential FRB confidential information and other measures to resolve the Fed’s action. Separately, the FRB filed charges against Mr. Jiampietro related to his role in this matter through its administrative process. Mr. Jiampietro, charged the FRB, allegedly used and disseminated information provided by Mr. Bansal for his own gain. The FRB seeks as damaged from Mr. Jiampietro US $337,500 and to bar him from associating with any banking institution. (Click here for background on this matter in the article, “Investment Bank Group Fined US $50 Million by NY State Agency for Actions of Malfeasant Employee” in the September 1, 2015 edition of Bridging the Week.)
My View: Nowhere in the FRB’s release related to Goldman Sachs (click here to access) was any mention of steps it would be taking to lessen the likelihood that its employees would illicitly disseminate confidential information in the future. Nor was there mention of any internal review regarding what breakdowns in oversight and internal controls might have contributed to the unlawful dissemination of confidential supervisory information by Mr. Gross. Since Goldman Sachs was publicly castigated and sanctioned twice by two separate regulators for its role in this matter, hopefully appropriate measures are being taken by the FRB too internally, even if not in the public eye.