Ex-N.Y. Fed Employee Pleads Guilty to Leaking Documentsby and
Misdemeanor plea tied to 2014 leak from Fed to Goldman Sachs
Goldman Sachs earlier agreed to pay $50 million over leak
A former staffer at the Federal Reserve Bank of New York pleaded guilty to stealing confidential government documents and giving them to his former boss, then a junior banker at Goldman Sachs Group Inc.
The ex-Fed employee, Jason Gross, admitted in Manhattan federal court Wednesday to leaking the material to Rohit Bansal, a former Goldman Sachs banker. Bansal will plead guilty Thursday to a misdemeanor charge, a person familiar with the matter said.
Gross, 37, faces as long as 12 months in jail on the misdemeanor charge when he’s sentenced March 2. His lawyer, Bruce Barket, said he will ask for no jail time.
“He’s a relatively young man who obviously made an error,” Barket said outside court.
The pleas stem from purloined Fed documents that included information from the regulator on a mid-sized New York bank that Bansal’s group had been advising. Bansal obtained about 35 documents on approximately 20 occasions from Gross, according to a settlement last week between Goldman Sachs and the New York Department of Financial Services.
Gross sent the confidential documents to Bansal’s personal e-mail address, and Bansal forwarded those to his Goldman e-mail account, the regulator said. Bansal then circulated some of the Fed documents to senior personnel at Goldman including partner Scott Romanoff and a managing director, Joseph Jiampietro, both of whom were identified by title and not named by the regulator.
Goldman Sachs got the nickname “Government Sachs” because of the number of executives who moved into public posts, including former Chief Executive Officer Robert Rubin who was treasury secretary under President Bill Clinton. Bank of England Governor Mark Carney and Federal Reserve Bank of New York President William Dudley also worked there.
Under the settlement with the DFS, Goldman Sachs will pay a $50 million fine and face new restrictions for the next three years on how it handles delicate regulatory information. The bank admitted it failed to properly supervise the employee who received the confidential Fed information.
The leak was detected when Romanoff received one of the documents, called Bansal and asked where he got it. Bansal told him it came from the Fed, and Romanoff alerted the bank’s compliance department, according to the regulator.
The bank conducted an internal investigation, notified regulators and fired Bansal and a supervisor, according to an e-mailed statement Monday from Goldman Sachs.
“We have zero tolerance for improper handling of confidential information,” Goldman Sachs said in the statement. “We have reviewed our policies regarding hiring from governmental institutions and have implemented changes to make them appropriately robust.”
Gross was fired by the New York Fed for sharing information with Bansal, according to two people briefed on the matter. The New York Fed said in a statement in November that it has “zero tolerance” for employees who don’t safeguard confidential information.
The cozy relationship between the government and Wall Street has drawn criticism from presidential candidates including Texas Senator Ted Cruz, who said in a March interview on Bloomberg’s “With All Due Respect” that banks such as Goldman Sachs shouldn’t get favors from the government.
“My criticism with Washington is they engage in crony capitalism,” Cruz said in the interview. “They give favors to Wall Street and big business.” Cruz’s wife, Heidi, was a managing partner at Goldman Sachs.
The case is U.S. v. Gross, 15-cr-00766, U.S. District Court, Southern District of New York (Manhattan).