Goldman Sachs To Pay $50 Million Fine, Admit Failure To Supervise Over Fed Breach

Goldman Sachs Group GS -1.06% is set to pay a $50 million fine and admit to failure to supervise for banking law violations after an associate at the investment bank, Rohit Bansal, used his contacts at the Federal Reserve Bank of New York, his previous employer, to gain confidential regulatory information he then used when advising clients.

The fine, administered by the New York Department of Financial Services, requires that Goldman admit it failed to supervise Bansal. It further calls for Goldman to accept a three-year voluntary abstention from accepting new consulting engagements that require the Department to authorize the disclosure of confidential information under New York banking laws. Goldman also has pledged to implement new compliance procedures with employees who previously worked in government and regulatory roles.

“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,” Acting Superintendent Anthony J. Albanese said in a statement.

“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,” he added.

Bansal, who was hired by Goldman in July 2014 after a near seven-year stint at the New York Fed, joined the financial institutions group within the firm’s investment banking division. The issues settled on Wednesday stem from Bansal’s initial work at Goldman.

In May, prior to his start date, the New York Fed restricted Bansal from consulting for a unnamed financial institution until February 2015. However, the NYDFS says in its settlement he began working with that entity upon his start date in mid-2014.

That quickly created problems.

In his brief spell with Goldman, Bansal, who goes unnamed in the NYFDS settlement but has plead guilty to leaking confidential documents, is alleged to have obtained about 35 confidential documents on 20 occasions from a former co-worker at the New York Fed. Those documents, the settlement shows, helped Goldman advise unnamed clients on regulatory matters such as capital ratios. The leaks appear to have occurred in August and September 2014.

No comments:

Post a Comment