By Justin Baer And Christopher M. Matthews
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 on
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 New York Department of Financial Services, the Federal
Bureau of Investigation and the Manhattan U.S. attorney's office
have begun preliminary investigations into the incident, according
to people familiar with the probes.
"We have been actively and carefully reviewing this very serious
matter, " said Matt Anderson, a DFS spokesman.
Investigators are examining whether the junior investment
banker, Rohit Bansal, violated state and federal laws that require
bank examination information to be kept confidential, according to
a person briefed on the investigation. Such information could
provide a broad picture of an organization's banking activities and
give competitors an advantage, the person said.
So far the investigation is limited to Mr. Bansal's activities
and supervision of him by Joseph Jiampietro, another person briefed
on the investigation said.
"Mr. Jiampietro never knowingly or improperly reviewed or
misused confidential supervisory information," Adam Ford, his
attorney, said in a statement. "He should not have been terminated.
Any compliance failings regarding Mr. Bansal had nothing to do with
Mr. Jiampietro."
Before joining Goldman, Mr. Jiampietro was a top adviser to
Federal Deposit Insurance Corp. Chairman Sheila Bair.
An internal review by Goldman Sachs found that Mr. Bansal may
have obtained confidential information and shared it with Mr.
Jiampietro, but did not find anything indicating that potentially
confidential information was misused, one person familiar with the
matter said.
An attorney for Mr. Bansal did not immediately respond to a
request for comment.
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.'"
Mr. Bansal 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 to the
division's compliance unit and its general counsel alerted the New
York Fed, they wrote.
The New York Times first reported on the incident Wednesday.
Mr. Bansal 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."
Jason Gross, the New York Fed employee who allegedly provided
the information to Mr. Bansal, stopped working at the New York Fed
around the time the investigation began, a person familiar with the
matter said.
Bruce Barket, Mr. Gross' lawyer, declined to comment.
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
obstructed her oversight of the firm.
The former regulator, Carmen Segarra, had sued the New York Fed
and two supervisors last year for wrongful termination. She 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. A federal judge dismissed her lawsuit
in April and the New York Fed has denied her allegations.
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.
Write to Justin Baer at justin.baer@wsj.com and Christopher M.
Matthews at christopher.matthews@wsj.com
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