On April 1, 2022, the Board of Governors of the Federal Reserve System issued an Order of Prohibition against Joseph A. Jiampietro, a former managing director of Goldman Sachs’ Financial Institution Group (“GSFIG”), permanently barring Jiampietro from participating in the banking industry. The Order followed a 5-year enforcement proceeding that commenced in August 2016 with the issuance of a Notice of Intent to Prohibit (“Notice of Intent”), seeking to penalize Jiampietro for his unauthorized use and dissemination of confidential supervisory information (“CSI”), which is defined as information created or obtained in furtherance of the Board’s supervisory, investigatory, or enforcement activities relating to any supervised financial institution.
In February 2011, Jiampietro was hired by GSFIG to provide advisory services to its financial institution clients. By 2012, Jiampietro had developed a regulatory advisory practice focused on advising mid-sized and regional banking organizations on various regulatory issues, including the impact of bank regulations and supervision on mergers and acquisitions. The Notice of Intent alleged that, between 2012 and September 2014, Jiampietro repeatedly obtained, used, and disseminated CSI in furtherance of his regulatory advisory practice, in order to benefit himself and Goldman Sachs. In addition, the Notice of Intent claims that, in 2014, GSFIG undertook an initiative to pitch regulatory advisory services to financial institutions, with a focus on enterprise-wide risk management (“ERM”), model risk management (“MRM”), and the Board of Governor’s Supervisory Capital Assessment Program (“stress testing”). Jiampietro then hired a former supervisor of the Federal Reserve Bank of New York, Rohit Bansal (“Bansal”), for the purpose of gaining access to CSI specifically relating to the Board’s stress test and its evaluation of supervised institution’s ERM and MRM processes. The Notice alleges that this confidential information was used, in turn, to render regulatory advisory services and to pitch potential advisory services to existing and prospective clients.
Jiampietro’s alleged misuse of the CSI materials was discovered in September 2014 when Bansal sent an email to a partner at Goldman Sachs, and others, attaching the CSI. The partner immediately recognized the confidential nature of the attached information and notified Goldman Sachs’s compliance department of the potential regulatory violation. During a subsequent investigation conducted by Goldman Sachs, Jampietro admitted to having maintained and disseminated CSI. He was then terminated in October 2014.
The Notice of Intent asserts three basis for imposing a prohibition on future participation in the banking industry under Section 8(e) of the Federal Deposit Insurance Act, including engagement in unsafe and unsound banking practices, violations of 12 CFR § 261.22(e), and breaches of Jampietro’s fiduciary duties. On April 1, 2022, Jampietro consented to the Prohibition Order barring him from any further participation in the affairs of any institution or agency specified under 12 U.S.C. § 1818(e)(7)(A).
The enforcement proceeding and Prohibition Order serve as important reminders of firm’s obligation to supervise and monitor employee’s access to, and unapproved use of, CSI. To avoid regulatory scrutiny and the imposition of other penalties under the FDI Act, firms should maintain adequate controls and training programs relating to the proper handling and use of CSI and diligently monitor their employees’ engagement with such information.
