On August 5, Goldman Sachs entered into a consent order with the Federal Reserve and agreed to pay a $36.3 million civil penalty for its unauthorized use and disclosure of confidential supervisory information.
Confidential supervisory information includes reports of bank examinations and other confidential reports prepared by banking regulators, and any information contained in such reports. It is illegal to use or disclose confidential supervisory information absent prior approval of the appropriate regulator.
According to the consent order, the Reserve Board found that Joseph A. Jiampietro, a former managing director with Goldman’s investment banking unit, improperly used confidential information in presentations with potential and existing clients in an effort to solicit business for the firm. The regulator says that Mr. Jiampietro obtained the confidential information from a former Federal Reserve Bank of New York staffer who was hired by Goldman.
The violation was first discovered and reported to the Federal Reserve Bank of New York by Goldman. The firm ultimately fired both Mr. Jiampietro and the former Federal Reserve Bank of New York staffer.
The Federal Reserve also determined that “since at least 2012, Goldman did not have adequate policies and procedures to detect or prevent the unauthorized dissemination and use of confidential supervisory information.” As a result, it ordered Goldman to review and strengthen its policies and procedures to ensure the proper receipt, use and dissemination of confidential supervisory information.
The Federal Reserve also announced that it is beginning enforcement proceedings against Mr. Jiampietro, and wants to permanently bar him from the banking industry and pay a $337,500 penalty. Mr. Jiampietro, who joined Goldman in January 2011, is suing the bank for the payment of legal fees in connection with his case against the Federal Reserve.
The Federal Reserve press release regarding the consent order is available here: https://www.federalreserve.gov/newsevents/press/enforcement/20160803a.htm.