The Magazine of Corporate Responsibility

Courts Fault Feds, SEC for Going Easy on Banks

by Marian Wang, ProPublica

When big banks have announced settlements with the Securities and Exchange Commission, we’ve put those agreed-upon fines into perspective, and have often found that even millions of dollars in fines aren’t too hard for these big financial firms to shell out.

Courtroom_iStock_000001600823X_FeatureJudges, increasingly, seem to agree. This week, a federal judge even called a $298 million settlement between U.S. prosecutors and Barclays—the U.K.’s second largest bank—“a sweetheart deal,” asking prosecutors, “Why isn’t the government getting tough with the banks?

Barclays was accused of altering financial records to hide that it was breaking U.S. sanctions in trades with Iran, Cuba, Sudan, Libya and Burma from 1995 through 2006. Its deal with the Justice Department would help it avoid prosecution, according to The Wall Street Journal, but the judge has ordered that the lawyers return to court today to address his concerns about the settlement’s leniency.

A federal lawyer argued on Tuesday that the settlement is “in excess of what the company earned” when it processed the trades from the sanctioned countries, Bloomberg reported; Barclays declined to comment.

Earlier this week, another federal judge rejected a $75 million settlement between Citigroup and the SEC.

Citigroup was accused of hiding its exposure to more than $40 billion in subprime CDOs. As we’ve noted, under its agreement with the SEC, it would’ve paid a $1 fine for every $500 worth of hidden exposure. The judge demanded additional information from both parties and scheduled another hearing in September, reported The Washington Post.

Last year, a judge also took issue with a $33 million SEC settlement with Bank of America over the bank’s disclosure of bonuses paid to Merrill Lynch employees before Merrill was taken over by BofA. The judge grudgingly approved the settlement when it was quintupled to $150 million, but still called it “half-baked justice at best,” reported The New York Times.

Update, 7/18: In today's hearing, the judge approved the $298-million settlement between Barclays and the Justice Department. Despite approving the settlement, U.S. District Court Judge Emmet G. Sullivan continued with his criticism, reported the Journal: "It's proceedings like these that raise concerns in the public's mind about fairness and justice."

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.   This article is republished with permission under a Creative Commons license.

Post to Twitter

Related Posts:


Tagged as: , , , , , , , , , , , , , ,