SEC sets sanctions against ex-Goldman employee who obtained Fed secret

The Securities and Exchange Commission brought sanctions against a former Goldman Sachs employee who obtained Federal Reserve secrets, seven months after the central bank permanently barred him from the banking industry.

Goldman Sachs's US headquarters

Goldman Sachs’s US headquarters

In a filing on June 16, the regulator said Rohit Bansal “is barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or nationally recognised statistical rating organisation”.

The SEC also said that as part of the action, Bansal is barred from participating in any offerings of penny stocks, including acting as a promoter, consultant or agent. He can apply to re-enter the industry at a future date, but his return will be subject to meeting certain regulatory conditions, the filing stated.

Bansal’s case came to light after prosecutors investigated the leak of confidential Fed materials in 2014. They accused the former Goldman banker of obtaining confidential supervisory documents from a contact inside the Federal Reserve Bank of New York and using them to further his career. Bansal previously worked for the New York Fed.

Bansal, who is in his 30s, in November pleaded guilty to one count of a misdemeanour offence of misappropriating government property in Manhattan federal district court. In March, he was sentenced to two years of probation and 300 hours of community service and fined $ 5,000.

He worked at Goldman from July to October 2014 in the financial institutions group of the investment bank. Goldman fired Bansal and another employee after discovering the leak, launched its own probe, and has since said it changed its hiring practices for former government employees.

“We dismissed Rohit Bansal as soon as we discovered that he had improperly brought confidential information into the firm,” a Goldman spokesman said on June 16. “We immediately reported this matter to the relevant authorities and have cooperated fully in their investigations.”

The Financial Industry Regulatory Authority also barred Bansal from associating with any Finra member firm.

The Fed board said Bansal accepted being barred from the industry as part of his plea. Jason Gross, the former New York Fed employee who passed the sensitive information onto Bansal, also pleaded guilty in Manhattan federal district court concerning the documents, which related to the regulator’s banking supervision.

The New York State Department of Financial Services last year fined Goldman $ 50 million for failing to properly supervise Bansal and others on his team. As part of the enforcement action, Goldman accepted a three-year ban on new regulatory consulting work involving the department and admitted to a lapse in oversight of its employees.

Scott Morvillo, a lawyer for Bansal, declined to comment.

A sentencing document provided by the US attorney’s office details how Bansal “attempted to cooperate with the government” in an attempt to reduce his sentence. The government “met with him on only one occasion, and thereafter determined not to pursue a cooperation agreement with him,” the document said.

Write to Katy Burne at katy.burne@wsj.com

This article was published by The Wall Street Journal

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