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Goldman Sachs Fined $50 Million Over Ex-Employee's Theft Of Regulatory, Confidential Data
Tom Burroughes
29 October 2015
US authorities have fined $50 million after an employee of the Wall Street firm agreed to steal confidential regulatory and government information to use in advising a client. The case is likely to reignite debate on whether there is too close a relationship between bankers and regulators and whether it is too easy for former regulatory employees to work for banks, or vice versa.
In a statement from the New York Department of Financial Services, it also announced that Goldman Sachs will accept a “three-year voluntary abstention from accepting new consulting engagements that require the NYDFS to authorise disclosure of confidential information”.
Media reports gave the name of the Goldman Sachs employee as Rohit Bansal. US federal prosecutors are preparing to unveil criminal charges against Bansal and former Federal Reserve employee Jason Gross, NBC reported, citing unnamed sources. During about 20 meetings, Bansal received 35 documents with confidential regulatory information from a former co-worker. (The NYDFS statement did not identify Bansal or other individuals by name.)
"We are pleased that Goldman Sachs has decided to resolve this matter and work with us to institute reforms that help prevent similar problems from occurring in the future. This case underscores the critical need for financial institutions to put in place strong controls and policies for employee conflicts screening and the use of confidential regulatory information,” Anthony Albanese, acting superintendent of financial services, said yesterday in a statement.
Goldman Sachs also admitted that a Goldman employee engaged in the criminal theft of department confidential supervisory information; its management failed to effectively supervise its employee to prevent this theft, and Goldman failed to implement and maintain adequate policies and procedures relating to post-employment restrictions for former government employees.
The firm will carry out reforms to help ensure it complies with restrictions surrounding government employees and prevent improper use of regulatory information, the statement from NYDFS said.
Explaining the case, the department said 21 July, 2014, an individual began work at Goldman Sachs as an associate in the firm’s Financial Institutions Group of the Investment Banking Division. That employee had, from around August 2007 to March 2014, been a bank examiner at the US Federal Reserve Bank of New York. His most recent position at the New York Fed was as the Central Point of Contact – the primary supervisory contact for a particular financial institution – for an entity regulated by the Department.
In March 2014, the associate was required to resign from his position at the New York Fed for, among other reasons, taking his work blackberry overseas without obtaining prior authorisation to do so and for attempting to falsify records to make it look like he had obtained such authorisation, and for engaging in unauthorized communications with the Federal Reserve Board.