Goldman Says It Fired Banker Who Obtained N.Y. Fed Information

By Michael J. Moore

Goldman Sachs Group Inc. (GS) said it fired a junior banker who brought confidential information from the Federal Reserve Bank of New York into the firm.
The banker, who had joined the company in July from the New York Fed, was dismissed a week after the discovery in late September along with another employee who failed to escalate the issue, according to an internal memo obtained by Bloomberg News that didn’t identify the pair. Jake Siewert, a bank spokesman, confirmed the contents of the memo, which was prompted by
a report in the New York Times yesterday.
“We have zero tolerance for improper handling of confidential information,” New York-based Goldman Sachs said in the memo. “We are reviewing our policies regarding any hiring from governmental institutions to ensure that they are appropriately effective and robust.”
Goldman Sachs and the New York Fed have faced questions about their relationship since a former examiner, Carmen Segarra, said her ex-colleagues at the regulator handled the bank with kid gloves. She gave what she said were secretly recorded conversations with those co-workers to the radio program “This American Life” in September.
U.S. Senator Sherrod Brown, an Ohio Democrat, scheduled a Nov. 21 hearing before his banking subcommittee on “regulatory capture” following Segarra’s claims.

Photographer: Ron Antonelli/Bloomberg

A man stands by a window at Goldman Sachs Group Inc. headquarters in New York. Goldman... Read More

‘Not Perfect’

Andrea Priest, a spokeswoman for the New York Fed, didn’t immediately respond to an e-mail seeking comment on the dismissed Goldman Sachs workers after normal business hours. The regulator also fired an employee it suspected of sharing information with the banker, the New York Times reported. In a statement to the paper, the New York Fed said it has “zero tolerance” for personnel who don’t safeguard confidential information.
“We have detailed rules and controls protecting confidential information,” the newspaper quoted the statement as saying. “We also know that we are not perfect, that information today is more difficult to safeguard, and we are resolute to learn from our experiences.”
The incident arose after the junior banker sent a document to a senior member of the financial institutions group within the firm’s investment bank, who then immediately alerted the compliance department, according to the company memo. The records included information on at least one of Goldman Sachs’s clients, a mid-sized bank overseen by the regulator, according to the New York Times.
Goldman Sachs’s general counsel alerted the New York Fed’s top lawyer the day the information was shared, and the firm notified other regulators within days, according to the memo.