letter, Daily Local News, 1/2/13
In the summer of 2012, The U.S. Department of Justice terminated its criminal investigation of Goldman Sachs, confirming that none of their bank executives would face criminal charges for their actions during the financial crisis of 2008. Justice officials defended their decision, stating, “Even though greed and other moral lapses were evident resulting in the financial crisis, the conduct was not necessarily illegal.” So it’s alright to rig interest rates, launder money, forge mortgage documents, and engage in securities fraud. Apparently large banks are not only “too big to fail,” they are also “too big to prosecute.”
It is interesting to compare some recent events. UBS AG, a large bank in Switzerland, faces a fine in excess of $1 billion for attempting to manipulate global interest rates. To date, no one at the bank has been charged with any criminal offense.
Barclays P.L.C. was recently fined more than $500 million for rigging interest-rate benchmarks in order to profit from speculating on interest-rate derivatives. To date, no one at the bank has been charged with any criminal offense.
In the fall of 2012, HSBC Holdings P.L.C., Europe’s largest bank, agreed to settle federal and state charges of money-laundering for a payment of $1.9 billion. This is punishment for the bank laundering more than $200 trillion between 2006 and 2009 for drug cartels and other criminal groups. To date, no one at the bank has been charged with any criminal offense.
Now, let’s go back a few years and look at what happened to Martha Stewart. In 2001, Ms Stewart sold 3,928 shares of ImClone Systems, after receiving nonpublic information about the stock. In 2003, she was indicted on several counts of securities fraud, along with a charge of obstruction of justice. She was found guilty in 2004 and sentenced to 5 months in federal prison, after which she served 5 months of electronic monitoring and 2 years of supervised probation.
For her actions, Ms. Stewart paid a fine of $30,000 and in addition paid $137,019 as treble damages for the losses she avoided by using nonpublic information in her 2001 stock sale. She was also prohibited from serving as CEO or CFO of any public company for 5 years.
A few years ago, Plato declared in The Republic (I, vi, 331): “Justice is giving each one his due.”
Oh, for the good old days.
Roger J. Brown, East Fallowfield