The U.S. Department of Justice (“DOJ”) financial fraud enforcement program’s actions in the wake of the 2007–2008 financial crisis have led to some of the largest settlements in the history of the DOJ. To date, 10 financial institutions have reached settlements with the DOJ resolving allegations of fraudulent packaging and sale of residential mortgage-backed securities (“RMBS”) in the run-up to the crisis. The government has recovered a total of nearly $62 billion in fines and penalties from these cases. While a few institutions have yet to resolve their RMBS cases with the DOJ, the RMBS cases have largely run their course. A decade out from the crisis, it is worth taking a look back at the conduct that led to these cases, the reasons the government was able to extract such large penalties and how financial institutions can prepare for such enforcement actions in the future.
In a January 4, 2018, memorandum regarding marijuana enforcement, U.S. Attorney General Jefferson B. Sessions rescinded, effective immediately, the previous guidance issued by the Department of Justice on marijuana, including the memorandum often referred to as the Cole Memo. To the extent a bank’s compliance program relating to marijuana-related businesses (MRBs) relied on the guidance in the Cole Memo, the bank should immediately re-evaluate what changes in that program, if any, may be appropriate.
To read the full text of this Alert, please visit the Duane Morris website.
As we head into autumn, many of us change our seasonal wardrobes, replace the filters in our home heating/cooling systems, swap our summer screens for winter’s storm windows and ready our vehicles for winter. Bankers participating in a Federal Deposit Insurance Corporation (FDIC) shared-loss program should consider adding one more seasonal item to their list—a check-up on the status of your shared-loss participation, particularly your commercial shared-loss program. Many banks acquired assets and deposit accounts of failed institutions in the years following the Great Recession via purchase and assumption agreements entered into with the FDIC. Those agreements included an eight-year commercial shared-loss component, whereby the acquiring bank shares losses with the FDIC during the first five years and then shares recoveries for the remaining three years of the term.
To read the full text of the Alert, please visit the Duane Morris website.
On May 7, 2013, the U.S. Attorney’s Office for the Southern District of New York (SDNY) unsealed extraordinary criminal charges against two registered representatives of a U.S. broker-dealer and a high-level Venezuelan government official for engaging in a “Massive International Bribery Scheme.” What makes this fraud scheme remarkable is that it involves the activities of a U.S. broker-dealer, its client, a foreign-owned and controlled bank, the Foreign Corrupt Practices Act (FCPA) and several suspicious transactions that potentially should have raised concerns—a perfect storm. This case may be the catalyst that jump-starts a government FCPA sweep of Wall Street that has been predicted since 2011, but not realized.
A Missouri court recently handed down a judgement in an ACH/wire fraud dispute between Choice Escrow and BancorpSouth, and in a change from rulings in similar cases, this judgment favored the bank. The judge’s findings may well impact how other cases are decided in the future.