Goldman Sachs to Pay $50M Fine Over Banker Who Took Fed Documents

by Reuters /

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Goldman Sachs Group Inc. will pay a $50 million fine for failing to supervise a banker who took confidential documents from the Federal Reserve Bank of New York and shared them with a client, the New York Department of Financial Services said on Wednesday.

As part of the settlement, Goldman took the rare step of admitting guilt in the case, conceding it had failed to properly supervise the now former banker, Rohit Bansal.

U.S. federal prosecutors are preparing to unveil criminal charges against Bansal and former Federal Reserve employee Jason Gross, a person familiar with the matter said on Monday.

Gross reached an agreement with federal prosecutors on Monday to plead guilty to misdemeanor theft, said Gross’ lawyer, Bruce Barket of Barket, Marion, Epstein & Kearon LLP. Bansal is weighing a guilty plea as well, according to a person familiar with the matter. A lawyer for Bansal could not be reached for comment.

Bansal and Gross could face up to a year in prison.

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In a statement, Goldman said it had immediately opened an investigation and notified appropriate regulators when it discovered that Bansal had confidential information from the Fed. Goldman then fired Bansal and a more senior employee who had "failed to escalate the issue," the firm said.

"We have reviewed our policies regarding hiring from governmental institutions and have implemented changes to make them appropriately robust,” the firm said.

The case has fueled critics who say the Federal Reserve has an overly cozy relationship with many of the banks it oversees.

Goldman's $50 million fine is twice the largest penalty that the state Department of Financial Services has previously imposed for consulting-related misconduct.

Gross and Bansal were former colleagues at the New York Fed. Bansal left to join Goldman Sachs in July 2014, where he was assigned to advise one of the banks he had previously regulated.

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Goldman fired Bansal after it discovered he was in possession of confidential Fed information that he had allegedly obtained from Gross was using to help advise his bank client. Gross no longer works for the New York Fed. '

Under the settlement Goldman agreed not to accept any new consulting work involving disclosure of certain types of confidential information by banking regulators for three years.

Goldman must also implement reforms to prevent improper use of confidential information from regulators and boost its compliance with so-called "revolving door" restrictions for former government employees who come work for the bank.

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