(CN) – Goldman Sachs will pay a fine and not accept certain consulting agreements for three years after an employee used confidential government information, a New York regulatory agency said Wednesday.
The New York Department of Financial Services levied a $50 million fine against the investment banking firm, which requires that it admit its failure to supervise an associate who used to work for the U.S. Federal Reserve Bank of New York.
The firm also agreed to a three-year abstention from accepting new consulting agreements that require NYDFS to authorize the disclosure of confidential information under New York banking laws, according to a department press release.
The Goldman Sachs employee, who is not named in a NYDFS consent order, was an examiner at the Federal Reserve Bank from 2007 to March 2014 before working for the firm. He began working for a Goldman Sachs client that he examined months earlier as a regulator, in violation of a post-employment restriction, the agency said.
The unnamed associate also got about 35 documents from a former Federal Reserve Bank co-worker that fell under the category of confidential regulatory or supervisory information, according to NYDFS. The agency says he then passed the documents onto Goldman Sachs executives, who used the information to advise their client.
Once executives realized how the information was obtained, they reported the issue and the former regulator was fired, according to the consent order.
“Goldman failed to provide training to personnel regarding what constituted confidential supervisory information and how it should be safeguarded,” the order states.
The firm has agreed to reform its policies and procedures for the improper use of confidential information, the NYDFS said.
“We are pleased that Goldman Sachs has decided to resolve this matter and work with us to institute reforms that help prevent similar problems from occurring in the future,” NYDFS Acting Superintendent Anthony Albanese said in a statement. “This case underscores the critical need for financial institutions to put in place strong controls and policies for employee conflicts screening and the use of confidential regulatory information.”
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