The global member association that provides training, news, community and, in February 2013, financial crime specialist certification, cited the lenient settlements given by the US government to several global financial institutions that have been caught committing serious crimes as the top story of the year.
Also cited by ACFCS is the LIBOR rate-rigging by several major financial institutions, including Barclays and UBS. ACFCS calls the rate rigging possibly “the biggest financial crime of all time” because of the huge financial and social impact the Libor rate-rigging has on widely diverse private and public sector victims.
ACFCS also lists near the top of the list the new legal precedent of “aiding and abetting fraud,” which was set in a Miami federal courtroom. It permits financial crime victims to sue financial institutions that provide bank facilities to financial criminals in certain circumstances.
The full ACFCS Top 10 Financial Crime Stories of 2012 follow. Visit ACFCS.org for this and related stories.
1. The dawn of “Bank Justice” under which major international financial institutions that are caught committing prolonged major crimes are allowed to plea bargain with the US government whose settlement terms are almost invariably, “Cut a check for a small piece of your tainted profits, say you’ll sin no more, and no one goes to jail.” A few 2012 examples: Barclays, HSBC, MoneyGram, Standard Chartered.
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2. The arrival of “Snitches, Wires and Flips” as staples of government investigations of Wall Street crimes and criminals. This equalizes the playing field for these lawbreakers with that on which mobsters and drug lords are very accustomed to playing. Who ever heard of white-stocking Wall Street big shots being subjected to the indignities of FBI phone taps, squealing by fellow insiders, and public disclosure of emails and other “electronically stored information”?
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3. The emergence of the “aiding and abetting fraud” precedent which provides financial crime victims a roadmap to sue banks for serving as willing servants of wealthy customers by providing banking facilities and laundering money for them, taking their gifts and ignoring money laundering and fraud controls even after it was apparent the customers were defrauding innocent victims. The precedent was set in January 2012 in the South Florida federal case, Coquina Investments vs. TD Bank and Scott Rothstein. Now a disbarred lawyer imprisoned for 50 years, Rothstein ran more than $1.2 billion through his TD Bank accounts before his scheme collapsed in October 2009. He is now testifying in an attempt to reduce his prison term. He says his fraud-money laundering scheme succeeded because he gave select TD Bankers a “rock star lifestyle” with glitzy gifts and favors. The trial jury awarded $67 million dollar to Coquina, including $35 million in punitive damages. No regulatory or enforcement action has been taken against TD Bank or any individual other than Rothstein.
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4. The Libor rate-rigging by several global banks. It may be the biggest financial crime of all time measured on the financial losses it inflicted. UBS, which the US has charged with a crime, and Barclays, which paid a soft civil penalty to regulators in lieu of criminal charges, have opened the door to expected actions against other banks. In this case, the victims need not fret about soft government settlements with the banks. They have taken the matter into their own hands by filing 16 class actions in US courts across the land, and last count. The victims include US municipalities, counties, investors, small banks, investment firms, housing authorities and others. The damages that may be awarded in these and coming lawsuits, including punitive damages, could run into the hundreds of billions of dollars.
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