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Goldman Sachs Re-configures Employee Compliance Program

Gavel BHThe Federal Reserve Board ordered Goldman Sachs Group to pay a $36.3 million civil money penalty for its unauthorized use and disclosure of confidential supervisory information and to implement an enhanced program to ensure the proper use of confidential supervisory information, according to a recent release from the Federal Reserve.

Additionally, the Board reports they are establishing implementation proceedings against Joseph Jiampietro, a former managing director at Goldman Sachs. They are looking to enforce a fine as well as permanently ban him from the banking industry due to his and his subordinates' unauthorized use and disclosure of confidential supervisory information which includes reports of bank examinations and other confidential reports prepared by banking regulators.  According to the Federal Reserve, it is illegal to use and/or disclose confidential supervisory information without the prior approval of the appropriate banking regulator.

While levying the fine on Goldman Sachs, the Federal Reserve says the Board found the firm's personnel improperly used confidential supervisory information of the Board in presentations to its clients and prospective clients in order to gain business for the firm. Furthermore, the Board found that since at least 2012, the firm did not have satisfactory policies, procedures, or acceptable employee training in place to guarantee compliance with current laws prohibiting the unauthorized use or disclosure of confidential supervisory information.

Because of this, the Board's order also necessitates Goldman Sachs put in place an enhanced program to ensure compliance with Board regulations with regards to the receipt, use, and dissemination of confidential supervisory information.

It’s noted that the order prohibits Goldman Sachs from re-employing those involved in the improper disclosure of confidential supervisory information as well as retaining these individuals as consultants or contractors. The Federal Reserve cites November 2015 when the Board permanently barred a former Goldman Sachs employee from the banking industry as a result of his guilty plea to the theft of confidential supervisory information.

The release adamantly implores all firms, including Goldman Sachs, to comply with all U.S. laws, rules, and regulations. They state that the board of directors of Goldman Sachs must confirm that its senior management enforces an effective compliance risk management framework and that potential compliance risk failures are appropriately brought to the attention of senior managers and addressed immediately. Additionally, the Board says that they will actively monitor Goldman Sachs' effectiveness in the matters requested.

About Author: Kendall Baer

Kendall Baer is a Baylor University graduate with a degree in news editorial journalism and a minor in marketing. She is fluent in both English and Italian, and studied abroad in Florence, Italy. Apart from her work as a journalist, she has also managed professional associations such as Association of Corporate Counsel, Commercial Real Estate Women, American Immigration Lawyers Association, and Project Management Institute for Association Management Consultants in Houston, TX. Born and raised in Texas, Kendall now works as the online editor for DS News.
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