Headline June 28, 2014

''' TOO BIG TO JAIL? : -

O" OH"' SIRES! "'

Just Yesterday  -Barclay's went into a financial swoon. Just watch the breakingviews and the roll out of another crisis.

Two large International banks   -Credit Suisse and BNP Paribas  -are expected to plead guilty to  ''criminal charges''  within the next few weeks.

If that happens, they will pay large fines and officially be felons.
''Should anyone care?'' ....asks this very highly respected author.

Is there really a difference between criminal convictions of banks and civil settlements that yield equally large fines?

Attorney General Eric H. Holder Jr. certainly thinks so. He proudly proclaimed a couple of weeks ago that there was no bank  "too big to jail".

The obvious problem with that statement is that it is a non sequitur. Big or small, banks and other corporations are too inanimate to jail. Executives conceivably could be sent to prison, but that is not what we are talking about here.

But if companies cannot be sent to the penitentiary Leavenworth, they can face the death penalty. Some think that this is what happened more than a decade ago to Arthur Andersen, which was the fifth-largest accounting firm in the country:

Before it was accused of criminal conduct in connection with the Enron scandal. It is possible, even likely, that Andersen would have failed without criminal charges-

So deep was the damage to its reputation, but the precedent has been cited by some large companies that succeeded in avoiding criminal charges.

Perhaps the most interesting part of the prolonged and leak-filled dance leading up to the expected criminal charges has been the effort to ensure that the banks will stay in business after they plead guilty.

Credit Suisse is expected to admit that it helped Americans evade taxes, and BNP Paribas is expected to admit that it did business with countries blacklisted by the united States.

Regulators will not enforce statutes that would seem to bar the banks from some activities.

To put it another way, the Justice Department has gone to great lengths to guarantee that convicted banks will not be treated like criminals. 

In being treated that way, the banks will receive the same break other banks have come to expect when they are caught violating rules or laws.

Those laws often prohibit violators from taking part in certain businesses or receiving privileges granted to law abiding companies. But those rules are routinely waived 

As part of settlements with the Securities Exchange Commission and other government agencies.

To some, such waivers are obviously necessary. ''If you don't get a waiver as part of a settlement,'' one former S,E.C official said, ''it's hard to imagine getting a settlement.''

The S.E.C. has not appeared to be eager to publicize the waivers. They are posted on the  S.E.C, website, but they are not announced at the same time as the settlements and are not included in the court documents describing the settlement.

As a result, news articles focus on the penalty being paid,  not the penalties the law might have required absent the waivers.

Are waivers requests ever refused? I could find no record of such a refusal on the S.E.C. website. Waiver discussions are apparently conducted privately and informally and then put on paper only when the matter is wrapped up.

If the S.E.C. will not grant the waiver, it is never formally requested and thus stays off the public record.

A typical example came on March 12, when Jeffries,  a brokerage firm,  accepted an  S.E.C. censure and fine for  failing to  supervise    Jesse C. Litvak. a former managing director:

Who had been convicted days earlier of   "defrauding"   the government's  Troubled Asset Relief Plan.  At the same time, the firm signed a deferred prosecution agreement-

With the Justice Department  stemming from the same incidents.

It paid  $25 million  in Penalties.   

The Honour and Serving of the Post continues. Thank you for reading and Don't miss the next one.

With respectful dedication to all the Students, Professors and Teachers of Finance and Banking.  See Ya all on !WOW!   -the World Students Society Computers-Internet-Wireless:

''' Let's Go '''

Good night and God bless!

SAM Daily Times - The Voice of the Voiceless


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