Carmen Segarra was a US New York
Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
–appointed regulator to
Goldman Sachs
Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, H ...
for seven months from October 2011. She discovered that Goldman Sachs did not have any policy on
conflict of interest
A conflict of interest (COI) is a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates to situations i ...
when it advised
El Paso Corporation
El Paso Corporation was a provider of natural gas and related energy products and was one of North America's largest natural gas producers until its acquisition by Kinder Morgan in 2012. It was headquartered in Houston, Texas. United States.
Pr ...
on selling itself to
Kinder Morgan
Kinder Morgan, Inc. is one of the largest energy infrastructure companies in North America. The company specializes in owning and controlling oil and gas pipelines and terminals.
Kinder Morgan owns an interest in or operates approximately of ...
, a company in which Goldman Sachs owned a
US$
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
4 billion stake, and with several former Goldman Sachs employees who had previously worked for Kinder Morgan on the El Paso team. She was pressured by her superiors at the Federal Reserve to alter her report, but stated that her professional view of the situation did not change, and refused to do so. She was dismissed shortly after.
[NY Times Dealbook: Suit Revives Goldman Conflict Issue, 10 October 2013]
/ref>
Segarra filed suit against the Federal Reserve in the , alleging that she was terminated due to reporting to her superiors that the Goldman Sachs Group did not have a firmwide conflict-of-interest policy. Segarra alleged that her termination violated the whistleblower protection provisions of the Federal Deposit Insurance Act, . Also included as defendants were Jonathan Kim, Segarra's supervisor, and two employees who were responsible for managing the relationship between Goldman and the Federal Reserve. The case was dismissed because Segarra "failed to allege that she was terminated ''because'' she 'reported' violations of anything other than SR 08-08." (Emphasis in original.) Because SR 08-08 is an advisory letter and does not carry the force of law, the court found, an allegation that she was fired for reporting its violation did not entitle Segarra to bring a claim under the whistleblower protection provision of . Segarra also brought several state law claims, but the court declined to exercise jurisdiction over the claims once it found that there could be no claim under the Federal Deposit Insurance Act.
Segarra appealed the district court's dismissal to the United States Court of Appeals for the Second Circuit
The United States Court of Appeals for the Second Circuit (in case citations, 2d Cir.) is one of the thirteen United States Courts of Appeals. Its territory comprises the states of Connecticut, New York and Vermont. The court has appellate juri ...
in May 2014. Her brief was filed on December 9, 2014, and defendant-appellees reply brief is due December 30, 2014.[ via PACERbr>non-free link]
/ref>
After her dismissal, Segarra in September 2014 released audio recordings about another issue in which the Federal Reserve did not properly regulate Goldman Sachs. After the European Banking Authority required European banks to increase their capital holdings to make them more robust to shocks, Spanish Santander Bank
Santander Bank, N. A. (), formerly Sovereign Bank, is a wholly owned subsidiary of the Spanish Santander Group. It is based in Boston and its principal market is the northeastern United States. It has $57.5 billion in deposits, operates about ...
arranged for Goldman to hold some of its shares in its Brazilian subsidiary for some years, for a payment of about $40 million, a practice that was considered by Federal Reserve to be "legal but shady." Segarra said that she had pointed out that there was a requirement, which was not followed, for Goldman to check that the FR had no objection to the terms. Opinions were published about the ineffectual behaviour of a government agency supposed to hold to account an organisation, rather than make minor criticism but take no action on being presented with disturbing or threatening information. Excerpts of the recordings were featured in a lengthy report on the radio show ''This American Life
''This American Life'' (''TAL'') is an American monthly hour-long radio program produced in collaboration with Chicago Public Media and hosted by Ira Glass. It is broadcast on numerous public radio stations in the United States and internation ...
''.
See also
* Regulatory capture
In politics, regulatory capture (also agency capture and client politics) is a form of corruption of authority that occurs when a political entity, policymaker, or regulator is co-opted to serve the commercial, ideological, or political interests ...
References
{{DEFAULTSORT:Segarra, Carmen
Living people
Federal Reserve Bank people
Goldman Sachs
Year of birth missing (living people)