Ethics Test - Sharing Secret Documents

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mikesswimn - Certified Professional
Rank: Neanderthal | banana points 2,299

What would you do if you got your hands on confidential documents that could greatly benefit your firm? What do you think your firm would do if they found out? A recent piece in Bloomberg discusses a similar situation at Goldman Sachs:

Goldman Sachs Group Inc. (GS) dismissed two bankers after one of them allegedly brought secret documents from the Federal Reserve Bank of New York into the firm.

A junior banker, who had joined the company in July from the New York Fed, was fired a week after the discovery in late September along with another employee who failed to escalate the issue, according to an internal memo obtained by Bloomberg News that didn't identify the pair. Jake Siewert, a bank spokesman, confirmed the contents of the memo, which was prompted by a report yesterday in the New York Times.

"We have zero tolerance for improper handling of confidential information," Goldman Sachs said in the memo. "We are reviewing our policies regarding any hiring from governmental institutions to ensure that they are appropriately effective and robust."

Certainly we are all incredibly ethical people who definitely know right from wrong, but assuming any set of circumstances, how would you handle it?

Comments (22)

Nov 20, 2014

I can't imagine how bringing these documents in would do anything but put yourself and everyone around you in harm's way. What's the upside to bringing them in secretly? To hope your team is okay with it and subsequently acts upon it illegally to profit a bit, increase their bonus slightly, and hope they aren't caught and tarnished for life? This is especially stupid as a junior banker. The easy decision is to just tell compliance and ask them what to do.

Nov 20, 2014

He didn't bring the confidential information along because it could great benefit the firm, he brought it along because it could greatly benefit himself.

Nov 20, 2014

GS has impressed me with its strong enforcement of regulatory rules. If I remember correctly, GS was one of the only banks that didn't get hit during the forex probe.

Nov 21, 2014
kyc133enydc:

GS has impressed me with its strong enforcement of regulatory rules. If I remember correctly, GS was one of the only banks that didn't get !!!!caught!!!! during the forex probe.

fixed it for you

Dec 3, 2014

,,,

Nov 20, 2014

Idiots. GS is making way too much money to deal with small time illegal arbitrage like this. Should've sold them to a smaller firm if you're going to be illegal about it.

Also, you don't bring the thing to do a show and tell with your banker friends.

These kids ruined their careers before they even got started.

Nov 20, 2014

"We are reviewing our policies regarding any hiring from governmental institutions to ensure that they are appropriately effective and robust."

This is hilarious considering GS is a revolving door at the higher levels for government employees. You think they'll retroactively apply this to Hank Paulson bailing his old firm out and letting Lehman die?

    • 1
Nov 20, 2014
Dingdong08:

"We are reviewing our policies regarding any hiring from governmental institutions to ensure that they are appropriately effective and robust."

This is hilarious considering GS is a revolving door at the higher levels for government employees. You think they'll retroactively apply this to Hank Paulson bailing his old firm out and letting Lehman die?

This haha. Can we get a statement from @"DickFuld" ?

I'm too drunk to taste this chicken -Late great Col. Sanders

Nov 21, 2014
Winning Since 1776:
Dingdong08:

"We are reviewing our policies regarding any hiring from governmental institutions to ensure that they are appropriately effective and robust."

This is hilarious considering GS is a revolving door at the higher levels for government employees. You think they'll retroactively apply this to Hank Paulson bailing his old firm out and letting Lehman die?

This haha. Can we get a statement from @DickFuld ?

@"Dingdong08" this is pretty much exactly what I've been saying all along. it's a major problem when you have government officials who have significant financial and let's call it 'emotional attachment based' incentives (incentives to help your friends and former colleagues) sitting in positions to influence outcomes that differentiate between their friends (GS) and their foes (LEH). If they had Paulson sitting as the Secretary of Agriculture, it would have been far less of an issue because there wasn't a whale of a conflict of interest for him in that seat compared to the seat he was in.

Nov 21, 2014

it sort of goes both ways right? if paulson wanted to push for reforms or implement a new policy, he would use his connections on the street or in GS to lead the wave.

Nov 21, 2014
DickFuld:
Winning Since 1776:
Dingdong08:

"We are reviewing our policies regarding any hiring from governmental institutions to ensure that they are appropriately effective and robust."

This is hilarious considering GS is a revolving door at the higher levels for government employees. You think they'll retroactively apply this to Hank Paulson bailing his old firm out and letting Lehman die?

This haha. Can we get a statement from @DickFuld ?

@Dingdong08 this is pretty much exactly what I've been saying all along. it's a major problem when you have government officials who have significant financial and let's call it 'emotional attachment based' incentives (incentives to help your friends and former colleagues) sitting in positions to influence outcomes that differentiate between their friends (GS) and their foes (LEH). If they had Paulson sitting as the Secretary of Agriculture, it would have been far less of an issue because there wasn't a whale of a conflict of interest for him in that seat compared to the seat he was in.

That whole clusterfuck was crony capitalism at its finest. If you swapped out the US for China or India and told the same story with Chinese or Indian names every westerner would scream about the corruption of a senior government official bailing out his old firm and friends and sticking it to his old enemy while destroying 30k jobs, and why it's so difficult to do business in those countries. But Hank gets a pat on the back and walks out a hero. Then he throatfucks ML down Lewis' throat with guarantees that he wouldn't give for a Lehman deal, then a couple of years later they question BofA about the wisdom of the deal and if they did enough diligence. If it wasn't so bad, it would actually be funny.

Nov 21, 2014
Dingdong08:
DickFuld:
Winning Since 1776:
Dingdong08:

"We are reviewing our policies regarding any hiring from governmental institutions to ensure that they are appropriately effective and robust."

This is hilarious considering GS is a revolving door at the higher levels for government employees. You think they'll retroactively apply this to Hank Paulson bailing his old firm out and letting Lehman die?

This haha. Can we get a statement from @DickFuld ?

@Dingdong08 this is pretty much exactly what I've been saying all along. it's a major problem when you have government officials who have significant financial and let's call it 'emotional attachment based' incentives (incentives to help your friends and former colleagues) sitting in positions to influence outcomes that differentiate between their friends (GS) and their foes (LEH). If they had Paulson sitting as the Secretary of Agriculture, it would have been far less of an issue because there wasn't a whale of a conflict of interest for him in that seat compared to the seat he was in.

That whole clusterfuck was crony capitalism at its finest. If you swapped out the US for China or India and told the same story with Chinese or Indian names every westerner would scream about the corruption of a senior government official bailing out his old firm and friends and sticking it to his old enemy while destroying 30k jobs, and why it's so difficult to do business in those countries. But Hank gets a pat on the back and walks out a hero. Then he throatfucks ML down Lewis' throat with guarantees that he wouldn't give for a Lehman deal, then a couple of years later they question BofA about the wisdom of the deal and if they did enough diligence. If it wasn't so bad, it would actually be funny.

You might be the only person on WSO who understands the history of this situation and why conflicts of interests are considered major problems.

If people think this started and ended with Lehman, well, I have a couple of bridges to sell you.

Nov 21, 2014
Dingdong08:

"We are reviewing our policies regarding any hiring from governmental institutions to ensure that they are appropriately effective and robust."

This is hilarious considering GS is a revolving door at the higher levels for government employees. You think they'll retroactively apply this to Hank Paulson bailing his old firm out and letting Lehman die?

"But we will continue to hire and rehire SEC attorneys for our legal divisions to ensure that we have zero issues with unexpected investigations."

    • 1
Nov 21, 2014

What was the benefit this junior Banker was going to get? Guys a fool. It's one thing to inside trade, but this was tantamount to a dog bringing it's master a bone.

Nov 21, 2014

They're throwing some low level grunts against the wall to make an example out of them and also for the sake of good press. Also, I suspect that there's more to the story, most likely along the lines of what Marcus pointed out; they were trying to use them to peddle influence. All fine and well and lots of people do it (I myself do not), but this is the kind of thing you don't do if you can't avoid getting caught....and don't bring such things into the office, ever.

Nov 21, 2014

I love how everyone on here is assuming that this Fed hired into Goldman was a trader in some kind of front office capacity... Why the heck would GS hire someone from the Fed to the front office and then put that inexperienced person into a seat where they have no actual capabilities for Trading or moving markets.. it's simple, you don't. They are quoted as being "bankers" because they worked at a bank, but that doesn't mean they were in any seat to move markets right? Need more color around this so we can actually evaluate the actions GS took and what the heck this fired ex-Fed kid was thinking..

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Nov 21, 2014

The Fed has their own trading floor at the NYC Fed for open market operations so it is certainly not out of the question for GS to hire a former Fed employee onto their desks.

Nov 21, 2014

The Fed has their own trading floor at the NYC Fed for open market operations so it is certainly not out of the question for GS to hire a former Fed employee onto their desks.

Nov 21, 2014

And plus, I've heard of Fed people getting hired into banks, but not Front Office.. more middle and back office type roles... or maybe fixed income or economic research if they are lucky.

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Nov 21, 2014

I understand that what he did was very very wrong but, how secret were the documents? ( I know you don't know what the documents were about just an example), what information should they contain to be classified as secret? Companies information, financial statements, IPOs...?

Nov 24, 2014
Nov 26, 2014