Justice Department Pushing for Guilty Pleas In Fraud Cases Against Banks


Criticized for letting Wall Street off the hook, the Justice Department is building a new model for prosecuting big banks, reports the New York Times. In a round of actions that shook the financial industry, the government pushed for guilty pleas, rather than the usual fines and reforms. Prosecutors aim to apply the approach broadly to financial fraud cases. Lawyers for big banks are adjusting their defenses and urging banks to fire employees suspected of wrongdoing in the hope of appeasing authorities. The Times says critics question whether the new strategy amounts to a “symbolic reprimand rather than a sweeping rebuke.” The Justice Department has won guilty pleas only from remote subsidiaries of big foreign banks, a move that has inflicted reputational damage but little else. The new strategy materialized in settlements with UBS and the Royal Bank of Scotland, which were accused of manipulating interest rates to raise profits. As part of a deal, the banks' Japanese subsidiaries pleaded guilty to felony wire fraud.

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