Former Goldman Employee Alleges Co-Workers Knew of Plans to Get Fed Secrets

By Katy Burne

A former Goldman Sachs Group Inc. associate has alleged that three of the firm's current employees knew in 2014 about his illegal efforts to get secrets from the Federal Reserve, according to new legal documents reviewed by The Wall Street Journal.

The former employee, Rohit Bansal, in 2015 pleaded guilty in a Manhattan federal district court to misappropriating confidential information about a midsize bank the Fed supervised, and which Goldman was advising at the time. He was sentenced to two years' probation. He also received a lifetime ban from banking from the Fed.

The Fed referred to that midsize bank client in previous legal filings as "Bank A," but the new legal documents -- related to an enforcement action against a former Goldman managing director -- indicate it was New York Community Bancorp, based in Westbury, N.Y. One of the documents names an employee of "Bank A," and that employee worked for New York Community Bancorp at the time of the theft of the information, according to the bank's annual reports.

Patrick Quinn, counsel to New York Community Bancorp, said, "The entire matter is subject to a confidentiality order," and declined to comment further.

Before joining Goldman in the summer of 2014, Mr. Bansal had worked for the Federal Reserve Bank of New York. A 2015 order from the New York State Department of Financial Services said the New York Fed asked him to resign after he was caught falsifying records. Mr. Bansal's take on the matter wasn't detailed in the order. Scott Morvillo, Mr. Bansal's lawyer, had no immediate comment.

In filings from previous legal proceedings, Mr. Bansal was accused of getting secrets about "Bank A" from a Fed employee on Sept. 23, 2014, at a dinner at Peter Luger Steak House in Brooklyn, N.Y., and emailing the information to a Goldman managing director, Joseph Jiampietro, later the same night.

Goldman said it fired Messrs. Bansal and Jiampietro after it learned of the events and settled civil charges brought separately against it by the Fed and the New York State Department of Financial Services, for $36.3 million and $50 million, respectively.

Mr. Bansal is now a witness for the Fed in a civil enforcement action it is pursuing against Mr. Jiampietro. The Fed accuses Mr. Jiampietro of asking Mr. Bansal to get Fed secrets for use in presentations to clients seeking their business. It also has accused Mr. Jiampietro of related misconduct going back to 2012 and is seeking to fine him $337,500.

Preliminary witness lists in Mr. Jiampietro's case reveal Mr. Bansal said in a 2015 deposition that four other Goldman executives had direct knowledge of conversations about him obtaining confidential Fed materials. Three of them still work for Goldman; a fourth is no longer employed by the firm.

The deposition isn't public, but some of its contents are referenced in the witness lists, which circulated between the Fed's enforcement counsel and Mr. Jiampietro's lawyers in December.

The Fed hasn't accused the four current and former Goldman employees of any wrongdoing, and their names don't appear on the Fed's preliminary witness list, indicating it doesn't anticipate calling them to testify. Darren Gersh, a Fed spokesman, declined to comment.

Goldman said it stands by the employees -- managing directors Phil Labbe and Scott Romanoff; Pratik Pareek, a vice president; and a former employee, Rajat Agarwal, who was a vice president at the time of the events. All four are on the witness list for Mr. Jiampietro's defense.

A spokesman for the bank, Michael DuVally, said in a statement that Messrs. Bansal and Jiampietro, the "two ex-employees, whom we promptly terminated after the firm self-identified the conduct, are the only ones we believe warranted sanction or discipline."

Mr. DuVally also said the current employees declined to comment. Attempts to reach Mr. Agarwal were unsuccessful.

The revelations in the deposition constitute the latest twist in the Fed's lengthy investigation of the 2014 leak that stoked concerns about close ties between the regulator and Wall Street, and of employees who move between the two in what critics have called a "revolving door" pattern.

The night of the steakhouse dinner, Mr. Bansal learned from his former Fed colleague about the examination rating the Fed was about to assign to "Bank A," according to previous legal filings.

The Fed alleges Mr. Bansal relayed the rating information to Mr. Jiampietro the same night because Mr. Jiampietro had asked him to get it. The Fed said Mr. Jiampietro shared it with others inside Goldman the next morning.

Mr. Jiampietro's lawyers say Mr. Bansal was acting on his own. Mr. Jiampietro "never requested Mr. Bansal obtain CSI [confidential supervisory information] from any source, never knew that he had done so, never saw any document he believed to be improperly obtained CSI, and never knowingly used improperly obtained CSI," his lawyer, Adam Ford of the law firm Ford O'Brien LLP, said in a legal filing.

According to a witness list compiled by the defense, Mr. Bansal testified in his 2015 deposition that in 2014, Messrs. Pareek and Agarwal attended several meetings with Messrs. Bansal and Jiampietro where confidential Fed documents were discussed and Mr. Bansal was asked by the other men to get the rating information about "Bank A" and other confidential documents because it would help their careers.

Mr. Bansal also testified in the deposition, according to the witness list, that Mr. Labbe attended a meeting at which Mr. Jiampietro asked Mr. Bansal to get another confidential supervisory document for use in a presentation seeking new business.

In the deposition, Mr. Bansal stated that Mr. Jiampietro planned to call Mr. Romanoff about the "Bank A" rating the morning after the steak dinner.

Mr. Bansal separately testified that Mr. Romanoff had asked him whether Mr. Jiampietro instructed him to get other confidential Fed documents on his second day of work, according to the witness lists.

During a Sept. 26, 2014, conference call with Goldman employees, Mr. Bansal sent other confidential documents in an email, according to the Fed enforcement order against Mr. Jiampietro. Mr. Romanoff alerted Goldman's compliance office once he recognized their confidential nature, the Fed said in its complaint against Mr. Jiampietro.

The firm launched an inquiry into the matter, and the Fed said Goldman fired Messrs. Bansal and Jiampietro in October 2014.

An initial hearing in Mr. Jiampietro's case has been scheduled for July 25.

Write to Katy Burne at katy.burne@wsj.com

(END) Dow Jones Newswires

January 27, 2017 12:43 ET (17:43 GMT)

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