One of the biggest scandals at the end of 2014 was the dramatic confirmation courtesy of 48 hours of declassified tapes by former NY Fed staffer Carmen Segarra that not only Goldman Sachs controls the New York Fed (headed by former Goldman managing director Bill Dudley), but that disturbingly one of Goldman Sachs' then-employees, former NY Fed regulator, then 29-year old Rohit Bansal was routinely being provided with confidential NY Fed documents.
As the NYT reported then, "from his desk in Lower Manhattan, a banker at Goldman Sachs thumbed through confidential documents — courtesy of a source inside the United States government. The banker came to Goldman through the so-called revolving door, the symbolic portal that connects financial regulators to Wall Street. He joined 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. He received the confidential information, lawyers briefed on the matter suspect, from a former colleague who was still working at the New York Fed."
The "colleague", and source of the stolen information, was another NY Fed employee, Jason Gross, whose official role was "bank examiner" ("bank leaker" would have been more appropriate).
Prior to joining the Fed, had had worked as a private CPA for two and a half years, and prior to that at Deutsche Bank for 4 years as a controller according to his LinkedIn profile we captured at the time.
And while both Bansal and Gross lost their jobs, we very much doubted any material consequence would befall the two conspirators for engaging in activity which would have led to lenghty prison fines for any other "mere mortal." Back in November 2014, we concluded our post on this story as follows:
Will anything change? Of course not. After all it is Goldman that runs the United States of America. Expect this latest scandal to be swept under the rug within days.
The scandal was indeed swept under the rug virtually overnight and there was just one loose end: what would be the fate of Mr. Gross who was "sharing" top secret Fed information with Goldman Sachs, specifically would he end up in prison.
We now have the answer.
As Reuters reports, Jason Gross was the latest former banker to make a mockery of the US judicial system when he was spared prison on Wednesday, "disappointing prosecutors who said his leaking of confidential documents to a friend at Goldman Sachs Group justified time behind bars."
Instead Gross, 37, was fined $2,000 by U.S. Magistrate Judge Gabriel Gorenstein in Manhattan and sentenced to a year of probation with 200 hours of community service after pleading guilty to a misdemeanor charge of theft of government property.
Prosecutors had sought six to 12 months in prison for Gross, who in November admitted to providing confidential information to Rohit Bansal, his former supervisor at the Federal Reserve Bank of New York who had left to work at Goldman Sachs.
According to Judge Gorenstein getting away with just a fine and some community service had already sent "a powerful message to others."
The message for those unaware, is that go ahead and steal Fed data and share with whatever bank you want, and if you are caught not only will you not go to prison and may a token fee, but once absolved of all evil, that same bank will most likely hire you to "compensate" you for your troubles.
In court, Bruce Barket, Gross's lawyer, said Gross in providing Bansal the documents thought he was doing a favor for a friend who had already seen them and even created some. "I don't think he thought much of it," Barket said. Or perhaps he thought just enough of it, hoping that he too would land a lucrative career at Goldman in exchange for his crime.
Goldman has said that after discovering Bansal obtained the confidential supervisory information, it notified regulators and fired him and a more senior employee who failed to take further action. The New York Fed also fired Gross.
As for the other co-conspirator, Bansal, who also pleaded guilty in November to theft of government property, he is scheduled to be sentenced on Tuesday. We expect he too will avoid prison time.