Financial & Insurance Fraud

Big Banks Face Another Round of U.S. Charges

Posted: October 10, 2014 at 8:00 am   /   by   /   comments (0)

The Justice Department is preparing a fresh round of attacks on the world’s biggest banks, again questioning Wall Street’s role in a broad array of financial markets.

With evidence mounting that a number of foreign and American banks colluded to alter the price of foreign currencies, the largest and least regulated financial market, prosecutors are aiming to file charges against at least one bank by the end of the year, according to interviews with lawyers briefed on the matter. Ultimately, several banks are expected to plead guilty.

Interviews with more than a dozen lawyers who spoke on the condition of anonymity to discuss private negotiations open a window onto previously undisclosed aspects of an investigation that is unnerving Wall Street and the defense bar. While cases stemming from the financial crisis were aimed at institutions, prosecutors are planning to eventually indict individual bank employees over currency manipulation, using their instant messages as incriminating evidence.

The charges will most likely focus on traders and their bosses rather than chief executives. As a result, critics of the Justice Department might view the cases as little more than an exercise in public relations, a final push to shape the legacy of Attorney General Eric H. Holder Jr., who was blamed for a lack of criminal cases against Wall Street executives.

Yet the breadth of the suspected wrongdoing in the currency inquiry — Deutsche Bank, Citigroup, JPMorgan Chase, Barclays and UBS are among the dozen or so banks under investigation — might distinguish it from the piecemeal nature of the crisis-era investigations.

And prosecutors are testing a new negotiating tactic, two lawyers said, using the currency investigation as a cudgel to potentially reopen other cases. Arguing that the misconduct would violate earlier settlements involving interest rate manipulation, prosecutors have threatened to impose new penalties in the interest rate cases.

Those interest rate cases, which have already led to settlements with five banks and laid the groundwork for the currency investigation, are experiencing something of a resurgence. For one thing, prosecutors are preparing additional charges against at least one trader suspected of manipulating the London interbank offered rate, or Libor, a benchmark that underpins the cost of trillions of dollars in credit card, mortgage and other loans.

Read the full story from nytimes.com >

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