NEW YORK — The Federal Reserve took action Wednesday against Goldman Sachs and one of its former executives, escalating a long-running investigation into a leak of confidential government information.
The action, which forced Goldman to pay a $36.3 million penalty, stemmed from an incident in 2014, when a junior Goldman banker took confidential information from the Federal Reserve Bank of New York. The junior banker, whom Goldman promptly fired, received the information from a New York Fed employee.
Both men pleaded guilty to stealing government property, and Goldman paid a $50 million penalty to New York state regulators because its “management failed to effectively supervise’’ the banker.
The Fed did not act against Goldman at the time, making its decision to pursue Goldman now a somewhat unusual move. The action, which cites Goldman for an “unauthorized use and disclosure of confidential supervisory information,’’ is also an awkward one for the Fed.
The leak, after all, originated at the Federal Reserve Bank of New York with one of its own employees. And the junior Goldman banker who received the confidential information was a former New York Fed employee himself. Goldman, not the New York Fed, was the one to uncover the leak.
Yet the Fed’s board in Washington, a unit that operates separately from the New York Fed, is the one penalizing Goldman.
And the Fed’s action goes further than Goldman’s settlement with New York state last year, reaching back several years to highlight how the bank failed since 2012 to have sufficient policies and employee training to prevent a leak like this one.
The case reflects a broader effort at the Fed to adopt a tougher stance against Wall Street misconduct and crackdown on individual bankers. In 2015, the Fed chose to bar six bankers from the industry, twice the number in 2014. The year before that, the Fed did not take any such actions.
The Fed’s case against Goldman, the details of which were reported last week by The New York Times, centers on what could have been a regulatory gold mine. The confidential information, the Fed said, included reports of bank examinations and other “confidential reports prepared by banking regulators.’’
The documents effectively provided Goldman with a window into the Fed’s private insights about regulatory matters. And the bank, the Fed said, used the information in presentations to current and prospective clients “in an effort to solicit business.’’
“The board expects all firms, including Goldman Sachs, to comply with all US laws, rules and regulations,’’ the Fed said in a statement, noting that it is “illegal to use or disclose confidential supervisory information without prior approval.’’
In its own statement, Goldman said it was “pleased to have resolved this matter.’’ The bank emphasized that it had fired the former junior banker, Rohit Bansal, and that it had immediately notified the Fed after discovering that he had “improperly obtained information from his former employer, the Federal Reserve Bank of New York.’’
Goldman also fired Joseph Jiampietro, an executive who helped oversee Bansal.
Goldman’s investigators found leaked New York Fed documents on Jiampietro’s desk, although the company never concluded that he knew about the leak. Instead, it reported to regulators that he had “failed to properly escalate’’ the problem.
But now the Fed, unlike New York state, has taken aim at Jiampietro, previously a senior adviser to Sheila C. Bair when she was chairwoman of the Federal Deposit Insurance Corp. In announcing an action against Jiampietro, the Fed said it was seeking to impose a fine and to “permanently bar him from the banking industry stemming from his and his subordinates’ unauthorized use’’ of confidential information.
Unlike Goldman, Jiampietro’s lawyers are fighting the case through the Fed’s civil disciplinary proceedings, disputing that Jiampietro had anything to do with the leak. They note that Bansal, who accepted a misdemeanor plea deal with federal prosecutors in Manhattan, did not explicitly accuse Jiampietro of instructing him to obtain the documents.
In a previous statement, a lawyer for Jiampietro berated the Fed for appearing to use “Mr. Jiampietro as an industry scapegoat.’’
The lawyer, Adam Ford of the Ford O’Brien law firm, added Wednesday that “the allegations filed against Mr. Jiampietro are demonstrably false.’’ Jiampietro, he said, “never requested confidential supervisory information from anyone and never used it for his or anyone’s benefit.’’
