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Criminal charges being prepared against former Fed regulator and junior Goldman Sachs executive

By ValueWalk
Capital Markets

Federal prosecutors are preparing criminal charges in a case of leaked information passing from the New York Fed to a former employee of the regulator then working at a major bank. Under a tentative deal first reported in The New York Times, Goldman Sachs would pay a $50 million fine, be banned from a certain type of bank consulting for three years and face additional restrictions regarding how it handles sensitive regulatory information.
Former Fed employee assigned task to work with bank he once regulated, while supervisor claims no knowledge regarding leaked information
Rohit Bansal first worked at the New York Federal Reserve Bank for seven years before he took a job at Goldman in 2014, where he was assigned to consult with the same banks he regulated while at the Fed.  He is accused of accessing confidential information about a bank client he supervised as a regulator.

Despite the fact that Bansal had emailed his supervisor the documents he had placed some of the leaked documents in question to his supervisor, Joseph Jiampietro, lawyers briefed on the matter said he will not face criminal punishment. Goldman fired Jiampietro, a former senior adviser to former Federal Deposit Insurance Corporation Chair Sheila C. Bair, for failure “to properly escalate” the issue internally. Jiampierto claimed to have never looked at the documents and was unaware they were improperly obtained.
After recusing himself from working with the bank, supervisors said to pressure junior Goldman banker to work with client
Goldman’s internal compliance process, which Bansal participated in, instructed employees not to use any material from a previous employer, but such clear instructions were not part of the New York Federal Reserve’s compliance procedures. Despite the confusion, Bansal’s recused himself from working with the one bank he was now assigned to consult with at Goldman, but claims he felt pressured to remain on the account when his supervisors encouraged him to work behind the scenes for that New York bank in question, the lawyers told the New York Times.
Goldman Spokesman Michael DuVally told the New York Times the bank had “reviewed our policies regarding hiring from governmental institutions and have implemented changes to make them appropriately robust.” As soon as the incident was discovered it was reported.
Goldman’s offer fails to match the regulator’s bid on a fine, as Bansal being shunned from banking industry
Goldman initially offered to pay the New York State Department of Financial Services a $3 million fine, but found the bid-ask spread on the deal to be much higher in accepting a $50 million penalty, admission that it failed to supervise Bansal alongside a proposed three-year suspension from involvement in certain consulting deals with banks in New York State, the report said..

The Federal Reserve is further expected to permanently bar Bansal from the banking industry, a tactic that was recently advocated on the opinion pages of the New York Times. The Fed has barred six people so far this year for infractions, a significant increase from the three preceding years, the report noted.

Bansal’s lawyers are appealing for leniency from criminal charges, as much of what Bansal did was categorized as “fair game.”

The Bansal case i

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