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Goldman fires staff over leak of confidential NY Fed information
November 20, 2014 / 6:26 AM / 3 years ago

Goldman fires staff over leak of confidential NY Fed information

The Goldman Sachs logo is pictured on their post as traders work on the floor of the New York Stock Exchange in New York August 4, 2014. REUTERS/Carlo Allegri

(Reuters) - Goldman Sachs Group Inc said it fired two employees over the leaking of confidential information from the Federal Reserve Bank of New York, raising again questions about the bank’s alleged cozy relationship with its regulator.

The bank said a junior employee was sacked for passing on to a colleague information from the New York Fed, his former employer, while a supervisor was fired for knowing about the matter but not escalating it.

The disclosure of the firings comes a day before a U.S. Senate subcommittee is scheduled to start hearings on whether the Fed’s relationship with the banks it regulates is too close.

The hearing follows the release of secretly recorded conversations between the New York Fed and Goldman officials that suggested Fed officials were reluctant to push Goldman for answers on a transaction with Spain’s Banco Santander.

Goldman said on Thursday it had immediately reported the incident that led to the firings to the New York Fed.

The junior banker had been employed with the bank for less than four months, Goldman said.

The confidential information provided Goldman a window into the New York Fed's private insights, including details about at least one of the bank's clients, the New York Times reported, citing lawyers familiar with the matter.(nyti.ms/1yVpoq6)

It is unclear whether Goldman’s bankers used the information, the Times added.

The “revolving door” relationship between Goldman and other government agencies such as the New York Fed has been a source of criticism in the past, with frequent movement of employees between the bank and its regulators.

Current New York Fed President William Dudley, for example, was Goldman’s chief economist until 2005.

In an internal memo obtained by Reuters, Goldman said the proper handling of confidential information was among its highest priorities and that it had a specific policy prohibiting an employee’s use of information obtained from former employers.

Goldman added that it was reviewing its policies regarding hiring staff from government institutions to ensure they were effective and robust.

The New York Fed said in a statement it had detailed rules and controls for protecting confidential information.

“Of course, 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.”

Additional reporting by Rama Venkat Raman and Avik Das; Editing by Rodney Joyce and Saumyadeb Chakrabarty

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