“‘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.”
“To those who think Wall Street has been inadequately punished for its role in the financial crisis and the aftermath, the latest levies on the industry are progress but still insufficient. ‘It’s a substantial step-up but that’s because in the last 10 years they’ve got away with murder,” says Dennis Kelleher, head of Better Markets, which campaigns for tougher financial regulation. ‘The global banks have been on a crime spree for a decade with the so-called market police just ignoring them,’ he says. ‘Relative to the ill-gotten gains and the damage that they’ve inflicted they [the penalties] are not substantial.’”
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