THE BURNED OVER DISTRICT

A banker with Goldmine Sachs, who previously worked for the Fed, got his buddy at his old job to send him some confidential information on one of his new clients. Now he is facing criminal penalties.

Federal prosecutors are preparing to announce a criminal case against a former Goldman Sachs banker suspected of taking confidential documents from a source inside the government, a rare criminal action on Wall Street that comes as Goldman itself is facing an array of regulatory penalties over the leak.

The banker and his source, who at the time of the leak was an employee at the Federal Reserve Bank of New York, one of Goldman’s regulators, might plead guilty to misdemeanor theft charges rather than fight the case at trial, according to lawyers briefed on the matter who were not authorized to discuss private deliberations. The men, who were both fired in
In a statement, a Goldman spokesman emphasized that the banker worked for the firm for less than three months, and that the bank “immediately began an investigation and notified the appropriate regulators” once it detected the leak. Nonetheless, the bank is expected to pay a significant price for the leak.

Under a tentative deal with New York State’s financial regulator, the lawyers said, Goldman would pay a fine of $50 million and face new restrictions on how it handled delicate regulatory information. The settlement with the Department of Financial Services would also force Goldman to take the rare step of acknowledging that it failed to adequately supervise the former banker — thrusting the bank back into the spotlight just as it was shedding a popular image as a firm willing to cut corners to turn a profit.

Curiously enough, Goldmine Sachs may have done the right thing according to its procedures when they discovered the leak. Still it is good to see them take a hit. The real fault is the revolving door between government and Wall St.