Fed Orders Goldman Sachs To Pay $36.3 Million Penalty

Goldman Sachs has been ordered to pay a $36.3 million penalty relating to a case in which a former employee allegedly used confidential regulatory information to win clients, reports CNBC.

In an order issued Wednesday, the U.S. Federal Reserve ordered the bank to pay the fine in regard to a case involving Joseph Jiampietro, an investment banker who regulators say used a Fed contact later hired by Goldman to obtain the information.

The offenses happened between Feb. 15, 2012 and Oct. 3, 2014 and came as Jiampietro was under fire at Goldman and told to find ways to generate more revenue, a complaint states. Jiampietro then allegedly developed a scheme where he "repeatedly obtained, used and disseminated" confidential information to lure prospective clients.

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. Jiampietro coached Bansal on how to land a job, then used him to get confidential "enterprise-wide risk management" (ERM) information through a contact Bansal had at the Fed, according to the complaint.

"In August and September, Bansal and Jiampietro used the non-public ERM framework in at least five pitches to potential and existing clients," the Fed charged.

Using the information "gave Jiampietro and Goldman Sachs a competitive advantage in providing regulatory advisory services and provided a personal benefit to Jiampietro."

The matter came to a head on Sept. 26, 2014, when Bansal allegedly sent an email to a Goldman partner containing what the partner knew to be ill-gotten confidential documents, according to the Fed complaint. The partner then notified Goldman's compliance department. The firm ultimately fired both workers.