By E.J. Fagan, June 2, 2014
Reuters has the story. Settlement negotiations are under way between New York and Federal law enforcement and BNP Paribas, to resolve allegations into whether or not the bank evaded U.S. sanctions. Reports have been circulating for a few days now that BNP Paribas could see financial penalties of up to $10 billion and may plead guilty to violating U.S. law.
Benjamin Lawsky, the Superintendent of Financial Services for New York State, is negotiating on behalf of New York. Previous money laundering settlements have resulted in much more modest fines, and little change at the senior level of of the bank’s management. Regulators may have expected banks to choose to fire senior management on their own following billion-dollar settlements in previous cases, but that did not materialize. This time, Lawsky does not want to leave it to chance:
“The details of settlement talks show how regulators are now demanding that bank employees be held personally accountable for their activities.
Lawsky, a former federal prosecutor who has extracted large penalties from other banks such as Standard Chartered Plc and Credit Suisse Group AG, has said he is making personal accountability a focus in his probes.
“If a bank commits a criminal act or if a bank commits serious regulatory violations, someone within that bank did it. The corporation is an inanimate thing,” Lawsky said last month.”
We’ll be monitoring this situation, but here’s a thought: will this rationale be extended to criminal prosecutions? Will Lawsky stop at requiring banks to fire individuals who committed crimes, or will they actually be prosecuted?