By Nate Raymond
(Reuters) - An administrative judge has recommended that a former Goldman Sachs Group Inc (N:GS) managing director be banned from the industry for distributing confidential U.S. Federal Reserve documents within the bank to advise his clients.
The ruling in the case of Joseph Jiampietro, the ex-managing director, followed investigations of how one of his subordinates at Goldman obtained leaked documents from a friend who worked at the Federal Reserve Bank of New York.
In a ruling unsealed last week, Administrative Law Judge Christopher McNeil recommended the Federal Reserve Board of Governors bar Jiampietro from the banking industry and said that imposing a $337,500 penalty may be warranted.
McNeil reached the decision without ruling on what was a central claim initially pursued by the Fed's enforcement counsel that Jiampietro asked a Goldman associate who previously worked at the New York Fed to obtain confidential Fed information.
McNeil ruled that Jiampietro recklessly engaged in unsafe and unsound practices and breached the duties he owed to Goldman by ignoring "red flags" and failing to determine the confidential nature of documents that originated with the Fed.
In papers filed on Wednesday, Jiampietro's lawyers argued that the ruling, which was unsealed on July 17, followed a process in which he was prevented from fairly mounting a defense.
"The entire administrative process that Jiampietro has suffered over the past year has fallen far short of his constitutional protections at every point," they wrote.
They also sought to appeal to the Fed's Board of Governors a later ruling that required further proceedings related to other allegations in the case.
The Fed launched enforcement proceedings against Jiampietro in August 2016 as it announced a $36.3 million settlement with Goldman to resolve claims centered on its unauthorized use and disclosure of confidential information.
The Fed claimed Jiampietro asked Rohit Bansal, a Goldman associate who previously worked at the Federal Reserve Bank of New York, on multiple occasions in 2014 to obtain confidential information.
Jiampietro and Bansal then used the information in Goldman Sachs' regulatory advisory work for current clients and pitches to potential clients, the Fed alleged.
Bansal and the ex-New York Fed employee, Jason Gross, pleaded guilty in November 2015 to theft of government property, a misdemeanor, and were sentenced to probation in March 2016.
They pleaded guilty a month after Goldman reached a related $50 million settlement with the New York State Department of Financial Services.