This morning news that Swiss Bank UBS has successfully purchased negotiated a guilty plea with the US Department of Justice for years of fraud in which they made billions manipulating international currency and interest rate markets. The fine for this massive fraud and breach of trust is half a billion dollars–just a few months of the profits reaped from the acts.
In the currency case, the bank is paying $342 million to the US Federal Reserve (who was supposedly overseeing and regulating them while the bank was repeatedly breaking the law), and in so doing, the bank avoids any further fines or felony charges in the matter.
The currency market is the largest publicly traded market in the world. Skimming illegal profits off 5 trillion a day of transactions is incredibly lucrative. The big banks have all been doing it, and they are announcing their cost-of-doing-business-fines today. Most importantly, the crimes are being admitted to by faceless corporations. No actors or executives are having to take responsibility as the directing minds of the crimes. No actors are going to jail, or indeed even losing their jobs. In fact most have been promoted based on the profits their actions netted for their employers and shareholders. See UBS to plead guilty:
Four other global banks are expected to announce U.S. settlements Wednesday over manipulating foreign exchange rates, people with knowledge of the discussions have said. Citigroup Inc., JPMorgan Chase & Co., Barclays Plc and Royal Bank of Scotland Group Plc will probably enter pleas related to antitrust violations, the people said.
What’s more, while the corporations have admitted to a litany of fraudulent acts and crimes, all of them are free to continue in positions of trust as advisers and asset custodians all over the world. Part of their plea deal includes agreed ‘waivers’ from public pension administrators, the SEC and other regulators that the banks will be able to continue their business without restraint or suspension of any kind. In fact the clients whose savings are being ‘managed’ by the offending institutions are not required to be notified directly that their funds are entrusted with convicted felons.
Permission to not advise individual pension members of their adviser’s fraud pleas last year, prompted an email with 600 ‘Thank you’s’ from Credit Suisse’s lawyer. See ‘Thank you’ email shows guilty bank’s efforts to keep business rolling:
That was part of an e-mail sent to the U.S. Department of Labor last fall by lawyer Melanie Nussdorf, three months after her client, Credit Suisse Group AG, admitted to helping Americans evade U.S. taxes.
The Labor Department oversees about $8 trillion in private-sector pensions, and so Credit Suisse, after making its guilty plea, needed the department’s permission to keep managing Americans’ retirement money. The bank would also need to notify “interested persons” that their funds were being overseen by a manager with links to a felon…Labor responded that it was enough, in many cases, to tell the pension managers rather than the clients, prompting Nussdorf to repeat “thankyou” 600 times.
The precedents are crystal clear: smaller independent advisers and brokers rightfully face lifetime industry bans and often incarceration for financial fraud (think Madoff and a host of other ‘smaller’ fraudsters).
Imagine if Madoff had been allowed to plea that it was not him but his company that ran the Ponzi scheme; and then been allowed to pay a fine and continue. The big banks are allowed to do precisely this, all while reaping special treatment deals, outrageous profits, promotions, board seats, and unfettered opportunity for continued abuse. See more in this direct video link report:
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