Goldman Sachs Group Inc (NYSE:GS) has fired Rohit Bansal, a junior employee, for allegedly accessing confidential information from the Federal Reserve Bank of New York, his former employer.

Rohit Bansal’s supervisor Joe Jiampietro, who failed to escalate the issue, was also shortly terminated thereafter.

Goldman Sachs Fired Two Staff For Alleged NY Fed Breach

Blurring lines between Wall Street and government

According to an article by Jessica Silver-greenberg, Ben Protess and Peter Eavis of Dealbook, Rohit Bansal joined Goldman Sachs Group Inc (NYSE:GS) in July after spending seven years as a regulator at the Federal Reserve Bank of New York, the government’s front line in overseeing the financial industry. When he left the Fed, Bansal was the “central point of contact” for certain banks. The investment bank assigned him to the part of the investment bank that advises other financial institutions based in the U.S. This assignment presented the junior employee with an ethical quandary: He might have to advise some of the same banks he once regulated.

Citing people familiar with the developments, the Dealbook reports Bansal gathered information about how regulators might view various issues facing Goldman Sachs Group Inc (NYSE:GS)’s banking clients. In an email to his supervisor, Joseph Jiampietro, Bansal shared some potentially confidential supervisory information about a Goldman banking client.

Jiampietro – a managing director at Goldman Sachs Group Inc (NYSE:GS), who was once a senior adviser to Sheila Bair, the former FDIC head – has since told colleagues he had no idea the information was subject to regulatory restrictions.

Goldman Sachs: Friday’s congressional hearing

The latest news about firing the two staff at the investment bank comes ahead of a congressional hearing on Friday that is examining whether there is too “cosy” a relationship between regulators and banks. The Senate banking committee is due to examine allegations from a former New York Fed examiner, who says that she was fired because her bosses wanted her to water down criticism of Goldman. The President of the NY Fed and former Goldman Sachs Group Inc (NYSE:GS) employee, Bill Dudley is due to testify.

In a statement, the NY Fed said: “As soon as we learned that Goldman Sachs Group Inc (NYSE:GS) suspected one of its employees may have inappropriately obtained confidential supervisory information, we alerted law enforcement authorities.”

Reacting to the latest news, Goldman Sachs Group Inc (NYSE:GS) said: “We have zero tolerance for improper handling of confidential information. We are reviewing our policies regarding any hiring from governmental institutions to ensure that they are appropriately effective and robust”.

Defending his client, Jiampietro’s lawyer Adam Ford said: “Mr Jiampietro never knowingly or improperly reviewed or misused CSI [confidential supervisory information]. He should not have been terminated. Any compliance failings…had nothing to do with Mr Jiampietro”.