Fed fines Goldman $36.3M for use of confidential material

The Federal Reserve Board on Wednesday ordered Goldman Sachs Group to pay a $36.3 million civil money penalty for its unauthorized use and disclosure of confidential supervisory information and to implement an enhanced program to ensure the proper use of confidential supervisory information.

Fed officials are also going after a former managing director at Goldman, Joseph Jiampietro, seeking to permanently bar him from the banking industry after his team allegedly leaked Fed documents to clients and prospective clients. The Fed claims that GS employees used the confidential information in order to gain the business of clients.

The cease-and-desist order says Jiampietro breached his fiduciary duty in using confidential banking regulatory information – “misappropriated Confidential Supervisory Information”, or CSI – “in connection with his regulatory advisory practice in order to benefit himself in his position at Goldman Sachs”. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself.

Regulators allege that Jiampietro worked with Rohit Bansal, a former Fed employee who was hired by Goldman to work on the firm’s fixed income desk.

In a statement, the Fed said it “expects all firms, including Goldman Sachs, to comply with all United States laws, rules, and regulations”.

Michael DuVally, a spokesman for the NY company, said “We’re pleased to have resolved this matter”.

However, the Fed said Goldman was partially to blame. Visit MarketWatch.com for more information on this news. The documents were subsequently used to advise bank clients.

“We previously reviewed and strengthened our policies and procedures after Bansal was terminated”, Mr. DuVally said”. Jiampietro was Bansal’s immediate supervisor.

“We have no tolerance for the improper handling of confidential supervisory information”, the bank added.