| inbluevt | Date: Friday, 2013/08/30, 11:57 PM | Message # 1 | DMCA |
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“Half a billion dollars is the largest penalty ever assessed against a financial services firm in the history of the SEC,” crowed the regulator’s head of enforcement three years ago as he announced a landmark settlement with Goldman Sachs.
That $550m agreement between Goldman and the Securities and Exchange Commission for allegedly misleading investors in structured mortgage products then stood as an isolated mountain in the landscape of enforcement actions. Now, it is a foothill in a much grander range.
“I would say we’re not in a new world, we’re in a new universe,” says one senior bank lawyer. “This has radically changed and it has changed because the penalties are exponentially higher.”
JPMorgan Chase is the new whipping boy for regulators, succeeding Goldman as the totem of Wall Street excess – from its traders’ ability to lose billions on derivatives and their alleged attempts to cover it up or allegations that the bank hired relatives of Chinese officials to win business.
The biggest single amount may end up being a suit against JPMorgan from a government housing regulator that, as the Financial Times revealed this week, is now seeking more than $6bn compensation for mortgage securities it sold that declined in value during the financial crisis. JPMorgan is resisting that amount. But it can, nonetheless, afford it, having made more than $6bn of net income last quarter. That is perhaps the problem for the whole industry, according to some bankers. Regulators might feel more confident of demanding searing fines from banks that can pay up without fear of shutting down.
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Message edited by inbluevt - Saturday, 2013/08/31, 0:15 AM |
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