Prosecutors Suspect Repeat Offenses on Wall Street - NYTimes.com - 0 views
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The reopening of these cases represents a shift for the government, the first acknowledgment that prosecutors are coming to terms with the limitations of how they punish bank misdeeds. Typically, when banks have repeatedly run afoul of the law, they have returned to business as usual with little or no additional penalty — a stark contrast to how prosecutors mete out justice for the average criminal.
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The decision to revisit the cases also draws attention to consulting firms that helped shape the original settlements. When determining the extent of wrongdoing at a bank, the government often relies on assessments from consultants that are handpicked and paid by the same bank.
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Even now that prosecutors are examining repeat offenses on Wall Street, they are likely to seek punishments more symbolic than sweeping. Top executives are not expected to land in prison, nor are any problem banks in jeopardy of shutting down.
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More recently, the government has grown skeptical of the argument that some banks are simply too big to charge, an argument that Sullivan & Cromwell often employs for its clients
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The investigations, the people said, also unearthed emails showing that PricewaterhouseCoopers changed the report not only at the suggestion of the bank, but also at the behest of lawyers working on the bank’s behalf. Like many banks caught in the government’s cross hairs, the Bank of Tokyo-Mitsubishi turned to Sullivan & Cromwell, an elite law firm as woven into the fabric of Wall Street as the banks it represents.
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When punishing banks, prosecutors have favored so-called deferred-prosecution agreements, which suspend charges in exchange for the bank’s paying a fine and promising to behave. Several giant banks have reached multiple deferred or nonprosecution agreements in a short span, fueling concerns that the deals amount to little more than a slap on the wrist and enable a pattern of Wall Street recidivism.
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Not every bank will have to plead guilty in future cases. Prosecutors still see benefits from deferred-prosecution agreements, which can require banks to install independent monitors and more broadly overhaul their practices than in the event of a guilty plea.
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Since 2001, at least eight big banks have committed further offenses after receiving an initial deferred-prosecution agreement, according to data assembled by Brandon L. Garrett, a University of Virginia law school professor and author of the book, “Too Big to Jail: How Prosecutors Compromise With Corporations.”
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Regulators and prosecutors blame a culture that prioritizes profit over compliance. And as banks have grown larger, and more international, illegality can stop in one unit of a bank even as it flourishes in another.
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It didn’t take long for concerns to arise. Just weeks after the bank settled in late 2012, its chairman appeared to violate a provision of the deal that forbade Standard Chartered executives from issuing “any public statement contradicting the acceptance of responsibility.” In a conference call, the chairman referred to the illicit transactions as “clerical errors” — comments he later retracted.