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Ex-Goldman banker facing possible lifetime ban sues Federal Reserve

NEW YORK (Reuters) – A former Goldman Sachs managing director sued the U.S. Federal Reserve on Wednesday, accusing it of dragging its heels on his appeal of a possible lifetime industry ban for mishandling confidential documents leaked from the bank.

Joseph Jiampietro, the former Goldman executive, said the Fed’s “neglect” has left him “indefinitely to suffer the effects” of findings last June by the administrative law judge who recommended the ban.

Jiampietro, who said he never engaged in wrongful conduct, said the Fed should dismiss its enforcement case, or else issue a final decision so that he can ask a federal appeals court to take up the matter.

“By neglecting to take final agency action, the Reserve Board has effectively trapped Jiampietro in an administrative purgatory,” lawyers for Jiampietro said in a complaint filed in U.S. District Court in Manhattan.

The Fed had no immediate comment.

Jiampietro’s case reflected difficulties that can arise when government employees move to the private sector but continue to communicate with their former employer.

The Fed accused Jiampietro of having in 2014 asked Goldman junior banker Rohit Bansal to obtain secrets from the Federal Reserve Bank of New York, where Bansal once worked, for use in Goldman’s client advisory work, and pitches to potential clients.

Bansal, and Jason Gross, his source at the New York Fed, pleaded guilty in November 2015 to theft of government property. Both were sentenced to probation, and received industry bans.

The administrative law judge, Christopher McNeil, concluded that Jiampietro breached duties he owed to Goldman by ignoring “red flags” and failing to determine the confidential nature of documents originating from the Fed.

In Wednesday’s filing, Jiampietro’s lawyer Adam Ford said his client had no chance to properly defend himself after the Fed changed its theory on the case.

Ford said the Fed had abandoned its theory that Jiampietro directed Bansal’s theft, and had instead argued that he merely failed to detect it, yet deserved the same punishment.

“The Reserve Board has a tremendous opportunity to fix a terrible injustice,” Ford said in an email.

Goldman paid $86.3 million in penalties to the Fed and New York State’s Department of Financial Services in connection with the leaking. It fired Jiampietro, and Bansal in 2014. Goldman, Bansal, and Gross are not defendants in Wednesday’s lawsuit.

The case is Jiampietro v Board of Governors of the Federal Reserve System, U.S. District Court, Southern District of New York, No. 18-04769.

Reporting by Jonathan Stempel in New York; Editing by Leslie Adler and Rosalba O’Brien