Course: Business Ethics

Lecturer: Dr. Mai Ngoc Khuong

Student name: Trn Vit Anh
Student ID: BAFNIU14199

IINDIVIDUAL ASSIGNMENT
GOLDMAN SACHS EMPLOYEE STEALING CONFIDENTIAL INFORMATION
The essay studies the case of confidential information leaking by former Fed regulator and exGoldman Sachs banker, Rohit Bansal. He was a seven-year regulator at the New York State Fed,
a government body who regulated banks and financial institutions. After Mr. Bansal joined
Goldman in July 2014, his Managing Director, Joseph Jiampietro assigned him to advise one of
the banks he previously regulated, a medium-sized bank in New York. During his advisory term,
he constantly acquired government confidential information about the bank from Jason Gross, a
former colleague who was still working at the New York Fed. During his employment at
Goldman, Bansal wrongfully obtained confidential information, including approximately 35
confidential documents of Fed bank examinations.
In essence, the leak gave Goldman huge help when advising the client. The information during
the examination was classified confidential and restricted at Fed flew to Goldman Sachs to
become material information, earning Goldman a huge advantage when auditing and advising
the banks. Part of Goldman's services for the midsize bank included advisory services with some
potential transactions regulated by Fed since a certain part of the midsize banks examination
ranking before had been relevant to these transactions. Bansal used confidential information
regarding the examination rating and conveyed this information indirectly (through his boss) to
the midsize bank, in advance of it being announced by the regulators. He even emailed the
Managing Director regarding the regulators' perspective on the Regulated Entity's forthcoming
examination rating, writing "You need to speak to the CEO of the bank about scheduling a
meeting with the government agency (the Fed) as soon as possible. He needs to meet with them
and display and discuss all the improvements and corrections they have made during the last
examination cycle.
The ethical issues in this case were slightly complicated to be addressed than it seems because of
involvedness of many parties. First, the then-Fed-now-Goldman employee Bansal faced ethical
dilemma: he has to advise, for profitability, some of the same banks he used to regulated and
governed, for wrongdoings. These things, profits and wrongdoings, are usually tied together yet
stayed hidden. Secondly, because of this regulators past work at the Fed, when he changed his
job, he presented at Goldman with a notice of post-employment restrictions stating clearly which
banks he had examined. However, his boss and HR personnel seemed to be unaware of this
notice, reflecting irresponsibility in hiring policy and using people. Finally, the Fed employee
who provided the confidential information for Bansal faced his own ethical dilemma too: Bansal
was his close friend even after Bansal moved to Goldman. He wanted to help Bansal, but the
help turned out to be the one-year prison.

The stakeholders of this ethical issue are more than just involved parties. Beside Goldman whose
reputation is destroyed, the leak also raises questions about the ability of the New York Fed,
known as the governments eyes and ears on Wall Street, to maintain its independence from the
institutions and banks whom it regulates. Moreover, involved parties in this issue are as broad as
all Goldman Sachss global stakeholders. Part of them are the clients who trusted their money
with the banks reputation and expertise. Since Goldman Sachs has a big reputation, when they
went into a serious case such that, it has a negative effect of the whole stock market and therefore
affect the whole economy. Any households who had shares in Goldman and trusted the bank with
their future prospect was hurt. Especially the most serious stakeholders would be anyone who
had direct business with the unreliable employee, Bansal, who put his old company, his new
company and many people at risk.
Within the Utilitarianism theory border which states that companies should act in such a way to
maximize benefits for all stakeholders in the long-term. Bansal decided to make himself and his
client short term happy and satisfied, but did not carefully think of the long term consequences.
Not only people lost trust in Goldman Sachs the symbol of investment banking world, but also
the whole company reputation came down because of one single persons acts. The costs of
Bansals actions outweigh the benefits in this situation, therefore, he violated the utilitarianism
theory. When Bansal collected (directly and indirectly) restricted government information and
used it to his own benefit, he was not benefiting all the stakeholders, only himself and the bank
he advised. When the leak was discovered, other clients were affected by having no trust
anymore and therefore finding another investment bank offer the same services with
transparency. The Goldmans employees are now hurt by their reputation of being unethical
based upon another employees actions. Everyone in the company has worked hard to gain the
banks big reputation and now, the fame is gone away, forcing its other employees to rebuild the
bank image as soon as possible. Goldman Sachs becomes an untrustworthy name which is one
of the worst things happened to a bank since people deposit their money in the bank by trust.
This hurt the company financially and their image as well as hurting the shareholders, customers,
and the general public. This now ruins peoples trust with the company in the long run and even
exposes some of government confidential information.
Next, within the virtue theory, Rohit Bansal acted with untrustworthiness, manipulation, and
many other evil traits. He violated this ethical theory by not having good character traits to
defense for acting honestly. He made his decision with personal gain and not thinking about the
consequences of his actions would have on the other parties and stakeholders. Moreover,
Goldman Sachs hired an unreliable employee and whether or not they had known about the
wrongdoings before the investigators found out has not been stated. As a result, Goldman Sachs
was fined, but they also acted firmly by firing involved employees and releasing a public
statement. They took responsibility for their employee and a result they literally paid the high
costs of $50 millions.
In my opinion, all Rohit Bansals wrongdoings could have been stopped earlier. First of all,
Goldman Sachs should have spotted their own bankers fault before the government did. Rohit
not only illegally acquired documents, but also shared the information with other colleagues at
Goldman Sachs as well to earn some affection. He used these documents to be advantage in his
career and clearly only benefit himself. Bansal was only an employee at Goldman Sachs for a
short period of time and received a fine and loss of career, while other employees who helped

share the information received a fine and community service. If I was Goldman managers, all
employees involved in the leak should have been fired completely with the post-employment
restriction notices. If they have unethical motives or they are easily influenced by wrongdoings
like that, then they are not driven by transparency and trust, and therefore, do not fit with the
Goldman Sachs code of ethics.
Moreover, on the HR personnels course of actions, when the bank hires former employees from
the Federal Reserve they seem to put the banks future at risk. It is clear that the leak happened
due to the fact that Goldman Sachs management failed to deeply supervise its employee to
prevent this theft from happening. From the beginning, Goldman HR managers failed to
maintain relevant policies and procedures relating to post-employment restrictions for former
government employees. (Bansal came to Goldman with a notice of which banks he had regulated
before). Banks and financial institutions like Goldman Sachs should be banned from recruiting
people who previously examined banks. This is a conflict of interest where deals could be made
to bringing the greatest good to the greatest number of people.
Even though Goldman Sachs did release a statement of We previously reviewed and
strengthened our policies and procedures after Bansal was terminated. We have no tolerance for
the improper handling of confidential supervisory information. (Protess, The New York Times).
The company can fix this issue further, by first firing ALL employees involved. However, by not
firing all the employees, but only the two (the leaker and the sender) directly involved sends the
signal that such wrongdoings can get away within staying hidden. The employees that were not
fired, but charged with community service! Their knowledge about the confidential information
alone should have them fired from working for advising and other services related. Secondly, the
involved employees should have taken full responsibility and paid all fees. Meanwhile, Goldman
Sachs paid the fine and even received restriction on their business in the near future. Goldman
weirdly never states about how they should not tolerate such behavior and build their company
on ethical actions. This includes employee and management ethical training, where the
management paid all the costs and stay silent for unethical consequences from their employees.
Thirdly, they should have the government investigators visit their offices and run a fine
investigation over all employees. By doing that, the public know that Goldman is not sneaking
anything and is truly transparent. Fourthly, Goldman Sachs should state publicly how they are
feeling for betraying the trust of all the stakeholders and put out their mission statement.
Goldman Sachs should carry out training and re-evaluate all upper management. Last but not
least, the company needs to follow the mission statement and strengthen its code of ethics. Being
an investment banking and big brother in financial advisory service sector, Goldman Sachs core
values should include trustworthiness, responsibility, and honesty. By having new regulations
and codes of ethics, it will help not only Goldman Sachs rebuilt image, but gain peoples trust
back again into the team.

REFERENCES
Silver-Greenberg J., Protess B., Eavis P. (2014, November 19). New Scrutiny of Goldmans
Ties to the New York Fed After a Leak. The New York Times. Retrieved from:
http://www.nytimes.com/pages/business/dealbook
Oran O. (2016, July 25). The Fed Is About to Drop a $50 Million Penalty on Goldman Sachs
(Again). Retrieved from http://time.com/
Barlyn S. (2015, Ocober 28). Goldman to pay $50 million for not supervising banker in NY Fed
case: NYDFS. Retrieved from http://www.reuters.com/
Marino J. (2015, Octiber 26). Goldman Sachs could face a $50 million fine in a regulatory leak.
Detail case. Retrieved from http://www.businessinsider.com/