The planned action, reported earlier by the New York Times, shows the Fed is advancing its own investigation into the incident, in which confidential regulatory materials were leaked to a Goldman staffer from one of his former colleagues at the Federal Reserve Bank of New York.
The Fed last year permanently banned from the banking industry the former Goldman staffer who obtained the sensitive documents, and the central bank is now expected to pursue a similar ban for that staffer’s former supervisor.
The leak was a black eye for the central bank because it raised fresh questions about the so-called revolving door between the regulator and Wall Street after much criticism in the wake of the financial crisis that the Fed was too lenient on big banks. Since the incident, the Fed has been weighing new measures to tighten the restraints it imposes on bank examiners who leave for jobs with financial institutions.
The enforcement actions could come in the next few weeks, one of the people familiar with the case said. Eric Kollig, a spokesman for the Federal Reserve Board of Governors in Washington, declined to comment.
The Fed is expected to seek to ban former Goldman executive Joseph Jiampietro from the banking industry. Jiampietro was fired by Goldman in October 2014, and his most recent role was as a managing director in the investment-banking division.
Adam Ford, a lawyer for Jiampietro, said, “He did nothing wrong,” adding any such Fed action would contrast with other regulators who took no action against him. He said his client is planning to deny he violated any laws, claiming his only involvement was receiving the documents as part of his job, and he didn’t request or use any of them.
A spokeswoman for Goldman said that when the firm discovered the sensitive documents had been obtained, it began its own investigation, terminated the employees implicated and changed its hiring practices for former government employees.
The Fed in November permanently banned from the industry Rohit Bansal, the Goldman employee who got the secrets while working under Jiampietro.
The Securities and Exchange Commission brought its own sanctions against Bansal in June and the Financial Industry Regulatory Authority also barred him from associating with any Finra member firms.
The Fed didn’t fine Goldman when it discovered the theft, but the bank paid $ 50 million to settle charges last year from the New York State Department of Financial Services that it failed to properly supervise Bansal. A DFS spokesman declined to comment.
Goldman accepted a three-year ban on regulatory consulting involving the department as part of that arrangement. In its own investigation, the bank concluded Jiampietro failed to properly inform Goldman managers about the incident.
Bansal, who is in his 30s, is now a cooperating witness in the case under the terms of his sentencing. He pleaded guilty in November to one count of a misdemeanor offense in misappropriating government property in Manhattan federal district court.
He was fined $ 5,000 in March and was sentenced to two years’ probation with 300 hours of community service. Scott Morvillo, a lawyer for Bansal, declined to comment.
The former New York Fed employee who passed the secrets on to Bansal, Jason Gross, also pleaded guilty in Manhattan federal district court.
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This article was published by The Wall Street Journal