Fed takes action against Goldman Sachs in NY Leak case

July 26, AtoZForex – The Federal Reserve (Fed) is currently preparing to take formal enforcement action against the Goldman Sachs Group Inc. and one of its former executives.

Fed takes action against Goldman Sachs in NY Leak case

The Fed enforcement action is about to be brought as a result of a case concerning the theft of central-bank secrets two years ago, as it is reported by people, familiar with the matter. Fed was also performing its own investigation of the case, in which secret regulatory materials were leaked to a Goldman employee from one of his ex-colleagues at the Federal Reserve Bank of New York.

The leak of confidential documents to the bank by one of the regulator’s employees in 2014 made the Fed tighten the restraints it applies on bank examiners who leave to work for financial institutions. A spokesman for the Federal Reserve Board of Governors in Washington, Eric Kollig, declined to comment on the matter.

As it appears, the Fed is anticipated to seek to forbid the banking industry activities for the former Goldman Sachs executive Joseph Jiampietro. However, a lawyer of Mr. Jiampietro stated: “He did nothing wrong.” He additionally added that his client is about to fight the accusations, claiming that his only involvement was receiving the documents, which also was a part of his job.

Moreover, a spokeswoman for Goldman Sachs stated that as soon as the company realized that the secret documents have been obtained, it started its own investigation of the case. She also commented:

“We have zero tolerance for improper handling of confidential information. We have reviewed our policies regarding hiring from governmental institutions and have implemented changes to make them appropriately robust.”

Goldman already paid $50 million to the regulators

What is interesting, the Fed did not set any fines for the Goldman Sachs, when it found out about the theft. However, while both the banker at Goldman Sachs and one of Fed’s New York employees have pleaded guilty to stealing the governmental property, Goldman paid $50 million to New York State regulators. The reason for this as Goldman Sachs presented was because its “management failed to effectively supervise” the banker.

As Fed takes action against Goldman Sachs, the bank agreed to a three-year period ban on regulatory consulting. During its own investigation, the bank indicated that Mr. Jiampietro failed to inform Goldman managers about the issue in the proper way.

AtoZForex has reached out to Goldman Sachs officials for the additional insights into the case.

The official from Goldman Sachs provided us with the following information:

“Upon discovering that a new junior employee had obtained confidential supervisory information from his former employer, the Federal Reserve Bank of New York, we immediately began an investigation and notified the appropriate regulators, including the Federal Reserve. That employee and a more senior employee who failed to escalate the issue were terminated shortly thereafter.”

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