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The next time you meet a banker ...


In the ongoing saga of how banks view the world, this article on Bloomberg today caught my attention. There is a very glaring absence of the "attorneys" who so vociferously and courageously champion shareholder and investor rights. There was no mention of Whackovia that I saw. I excerpted a few paragraphs below. A few months back someone here asked what I would want to prosecute bankers for. This a tiny portion of a reply.
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"He said the bank failed to adequately disclose its agreement to pay Merrill Lynch & Co. executives and others $5.8 billion, or the fact that Merrill, which it was buying, was suffering losses of as much as $15.3 billion in the fourth quarter of 2008.
"The bank made misstatements on earnings calls and in financial filings about assets tied to subprime loans as the housing crisis unfolded in 2007, the SEC said July 29 in a complaint filed in federal court in Washington. Some disclosures omitted more than $40 billion in investments, the SEC said.
"Former Chief Financial Officer Gary Crittenden, who left New York- based Citigroup last year, agreed to pay $100,000 to settle claims he didn't disclose the risk after getting internal briefings. Arthur Tildesley, Citigroup's former head of investor relations, will pay $80,000 to settle claims that he helped draft disclosures that misled investors, the SEC said. Tildesley now heads cross-marketing at Citigroup, according to the agency."
[Those fines are an insignificant fraction of their "compensation."]
Reply to
dapperdobbs

As the article says, this is the case of the Bank of America acquisition of Merrill. The irony, or injustice, is that the BofA shareholders are the victims of the inadequate disclosure. Guess who gets to pay the fine? BofA. The shareholders. Where else in law do the victims pay the penalty?
-- Doug
Reply to
Douglas Johnson

That is and always has been true of all federal regulatory agencies. The fines they impose, whether against businesses or individuals, are so tiny that they are an inconsequential cost of doing business, not a disincentive to ignore the rules.
--
 .Bill.
Reply to
Bill

It will be years before we know, but BP could get fined as much as $21 billion.
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I'd bet on it being smaller than that, but I expect it will be consequential.
-- Doug
Reply to
Douglas Johnson

The trouble is those fines may seem BIG to somebody reading a newspaper in Peoria. And those people are the ones who vote for the government officials that controls the regulatory agencies that decide the fines. If it is reported in the media that BP is fined ten million dollars for an oil spill, many readers would think that is significant punishment, not a minor cost of doing business. Many people would compare the dollar amount of the fine to what it would be mean for a local business around the corner, or how they would personally react if they had to pay it.
Reply to
Don

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