So-called “deferred prosecutions” were developed in the 1930s as a way of helping juvenile offenders. A juvenile who had been charged with a crime would agree with the prosecutor to have his prosecution deferred while he entered a program designed to rehabilitate such offenders. If he successfully completed the program and committed no other crime over the course of a year, the charge would then be dropped.
The analogy of a Fortune 500 company to a juvenile delinquent is, perhaps, less than obvious. Nonetheless, beginning in the early 1990s and with increasing frequency thereafter, federal prosecutors began entering into “deferred prosecution” agreements with major corporations and large financial institutions. In the typical arrangement, the government agreed to defer prosecuting the company for various federal felonies if the company, in addition to paying a financial penalty, agreed to introduce various “prophylactic” measures designed to prevent future such crimes and to “rehabilitate” the company’s “culture.” The crimes for which prosecution was thus deferred included felony violations of the securities laws, banking laws, antitrust laws, anti-money-laundering laws, food and drug laws, foreign corrupt practices laws, and numerous provisions of the general federal criminal code.
The intellectual origins of this approach to corporate crime can be traced back at least to the 1980s, when various academics suggested that the best way to deter “crime in the suites” was to foster a culture within companies of acting ethically and responsibly. In practice, this meant encouraging companies not only to provide in-house ethical training but also to enlarge their internal compliance programs, so that responsible behavior would be praised and misconduct policed. The approach found favor not just with some corporations (notably General Electric under the guidance of its then general counsel, Ben Heineman), but also with the US Sentencing Commission, which, in promulgating the Corporate Sentencing Guidelines in 1991, made the overall adequacy of a company’s prior internal compliance programs the most important factor in reducing (by as much as 60 percent) the size of the fine to be imposed on a company found guilty of a federal criminal violation.
SAN FRANCISCO (CN) – A federal judge dismissed a class action claiming Swiss banking giant UBS made billions of dollars by improperly closing accounts of secret account-holders, including those of a former Indonesian vice president.
Lead plaintiff AM Trust, the trust of former Indonesian Vice President Adam Malik,accused Zurich-based UBS in September 2014 of shutting down the accounts of people who died or were absent for prolonged periods, and of “withholding or destroying internal records pertaining to these accounts and converting the proceeds to their own use while wrongfully denying requests for information and accounting.”
The trust also sued the bank’s predecessors, Union Bank of Switzerland and Swiss Bank Corporation. UBS was formed in 1998 from the merger of the other two banks.
Before his death in 1984, Malik, who was also the 26th president of the United Nations General Assembly, had more than $5 million in cash and gold in Union Bank of Switzerland and UBS bank accounts, the trust said.
JPMorgan Chase (JPM) has agreed to pay $500 million to settle more than six years of class action litigation overBear Stearns’ sale of $17.58 billion of mortgage securities during the financial crisis, according to an article in Reuters.
It resolves claims that Bear, which JPMorgan bought in 2008, misled investors when it sold certificates backed by more than 47,000 largely subprime and low documentation “Alt-A” mortgages in 14 offerings from May 2006 to April 2007.
Bear was accused of making false and misleading statements in offering documents about underwriting guidelines used by its EMC Mortgage unit, Countrywide Home Loans, Wells Fargo and other lenders, and the accuracy of associated property appraisals.
The settlement still requires approval by U.S. District Judge Laura Taylor Swain in Manhattan.
In December 2009, the global financial system was still in crisis. The market had bottomed a short nine months earlier, and the fear of a double-dip recession was palpable.
With the world still on edge, one high-ranking United Nations official came forward with a bold assertion: The world financial system was saved from collapse by $352 billion of illegal drug profits propping up several key international banks.
Antonio Maria Costa, then head of the U.N. Office on Drugs and Crime, told The Guardian at the time that this funding from drug cartels was “the only liquid investment capital” available to these struggling institutions. He did not name specific banks or specific transactions, but claimed to have seen evidence from intelligence agencies and government investigations. Costa even went so far as to imply that by propping up those key international institutions, the entire financial system was kept afloat.
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