Goldman Sachs Sued by Ex-Manager Over Fed Secrets Leak Probeby
Former managing partner says bank failed to pay his legal fees
Lawsuit relates to U.S. probe of stolen Federal Reserve papers
Goldman Sachs Group Inc. was sued by a former executive who claims the bank failed to pay at least $350,000 in legal fees he racked up while defending himself in a government investigation into stolen Federal Reserve documents that wound up in his e-mail in-box.
Joseph Jiampietro, a onetime managing director at the company’s investment banking division, was fired in 2014 for failing to tell his superiors that an associate who used to work at the Fed e-mailed secret central bank documents to him, according to a complaint filed Thursday in Wilmington, Delaware.
Jiampietro maintains he was a Goldman Sachs officer at the time of the government investigation and was therefore entitled to have his attorney fees and expenses paid by the bank as outlined in its by-laws. The federal probe didn’t result in any charges against Jiampietro.
The case may hinge on how a judge interprets Jiampietro’s title of managing director. The same Delaware court this month ruled Goldman Sachs wasn’t required to pay the legal fees of Sergey Aleynikov, a former programmer accused of stealing the investment bank’s computer-trading code, simply because his title was vice president.
“Goldman Sachs has wrongfully refused to indemnify him for attorneys’ fees and expenses incurred in connection with his successful defense of the investigations,” Jiampietro’s attorney, Adam Ford, said in the complaint.
Michael DuVally, a spokesman for New York-based Goldman Sachs, declined to comment on the lawsuit.
While no charges were filed against Jiampietro and no action was taken against him by financial services regulators, the Federal Reserve staff told his lawyers in May that they would recommend that the Fed Board bring an enforcement proceeding against him for directing an underling to acquire the secret information and then using it for Goldman’s financial gain, according to the complaint.
The underlying case highlights problems with the so-called revolving door between government and Wall Street, which offers former regulators the chance to work, at much higher salaries, for institutions they once oversaw.
Rohit Bansal, a former Goldman Sachs associate who reported to Jiampietro, received the secret information from Jason Gross, an ex-colleague who was still working at the Federal Reserve Bank of New York at the time.
Gross was sentenced in March to a year of probation for leaking the information. Bansal, who worked for the government for seven years before leaving in 2014 to join Goldman, was sentenced to two years’ probation.
The case is Jiampietro v. Goldman Sachs Group Inc., 12601-VCL, Delaware Court of Chancery (Wilmington).