Goldman Sachs Group Inc. fired two employees after one of them
allegedly shared confidential information stemming from the Federal
Reserve Bank of New York's supervision of another bank.
In a memorandum to employees, Goldman executives wrote Wednesday
that a junior investment-banking employee had sent in September a
document to colleagues that included sensitive bank-supervisory
information. That junior banker and a more senior co-worker who
failed to alert his supervisors were terminated following an
internal investigation, Goldman said.
The Goldman executives told employees the firm's policy
explicitly prohibits an employee's use of materials and information
from previous employers.
"That policy," they wrote, "explicitly states that "work or any
proprietary or confidential information should not be brought into
the firm or used by you or disclosed to others at the firm without
the express permission of those previous employers.'"
The junior banker had joined the firm from the New York Fed 10
weeks earlier, according to the memo.
"The firm has been in regular communication with government
regulators and enforcement authorities and is assisting their
investigations," Goldman's John Rogers and Jake Siewert wrote in
the memo.
A more senior Goldman employee reported the incident, which was
reported earlier Wednesday by the New York Times, to the division's
compliance unit, and its general counsel alerted the New York Fed,
they wrote.
The junior banker worked in the investment-banking division's
financial-institutions group and advised regional banks, a person
familiar with the matter said. The Goldman investigation found he
had sought and received the confidential information from a current
New York Fed employee, the person said.
"As soon as we learned that Goldman Sachs suspected one of its
employees may have inappropriately obtained confidential
supervisory information, we alerted law enforcement authorities,"
the New York Fed said in a statement. "We have been working with
law enforcement authorities since then. Because any public
statement about the investigation could be prejudicial to a
potential future criminal case, we are unable to comment on the
specific facts that are under investigation."
The episode came to light as a Senate committee prepares to
scrutinize banks" influence over their regulators following
accusations by a former New York Fed examiner that Goldman
interfered with her oversight of the firm.
The former regulator, Carmen Segarra, had sued the New York Fed
and two supervisors last year for wrongful termination, had
secretly recorded conversations with her colleagues that reveal
allegations that some of Ms. Segarra's bosses passed on
opportunities to confront Goldman on issues the regulators"
staffers had with the firm.
On Friday, the Senate Banking Committee will host a hearing that
features an appearance by William Dudley, a former Goldman
executive who is now president of the New York Fed.
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