{"id":5278,"date":"2012-01-29T00:00:00","date_gmt":"2012-01-29T06:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/01\/despite_tougher_investigations"},"modified":"2022-04-22T11:04:22","modified_gmt":"2022-04-22T16:04:22","slug":"despite-tougher-investigations","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/despite-tougher-investigations\/","title":{"rendered":"Despite Tougher Investigations, SEC is Still Letting Wall Street Firms Avoid Punishments for Financial Fraud"},"content":{"rendered":"

According to The New York Times, by allowing that there be exemptions to certain regulations and laws, the Securities and Exchange Commission is letting Goldman Sachs, JPMorganChase<\/a>, Bank of America<\/a>, and other large financial firms avoid the liability that is supposed to come with losing securities fraud lawsuits while still making it possible for them to avail of the certain advantages that make it easier for them to raise investor money. <\/p>\n

The newspaper analyzed investigations conducted by the SEC in the last decade and discovered almost 350 instances involving the federal agency giving Wall Street firms and other financial institutions a break. In one example cited by The New York Times, although JPMorganChase has settled six securities fraud cases in the past 13 years, the financial firm has also been granted at least 22 waivers. (Waivers may grant permission to underwrite certain bond and stock sales and\/or manage mutual fund portfolios.) Another example involves Merrill Lynch <\/a>and Bank of America (The two financial firms merged in 2009) settling 15 securities fraud cases while being granted at least 39 waivers. <\/p>\n

Former regulators and securities experts say that granting the Wall Street firms the waivers gave them certain powerful advantages. According to former SEC chairman David S. Ruder, without the waivers a financial firm that agrees to settle securities fraud<\/a> charges could be faced with \u201cvast repercussions\u201d that could prevent them from staying in operation. <\/p>\n

SEC officials say the waivers are to allow for the stock and bond markets to stay accessible to companies that have the actual need to raise capital, which they believe is just as important as protecting investors. While the SEC has taken away certain privileges in securities fraud cases over misleading or false statements that were made about a financial firm\u2019s own business, it doesn\u2019t do the same when a Wall Street firm faces civil charges for allegedly lying about a specific security that it created and it is selling. <\/p>\n

Many believe that the government is continuing to be \u201ctoo soft\u201d on Wall Street\u2014even as the SEC has toughened up its investigations against financial firms accused of alleged fraud. Recently, there have been federal judges that have spoken out against the SEC\u2019s habit of letting financial firm\u2019s settle by letting them promise not to violate the law again. More than half the waivers issued have gone to Wall Street firms that had settled fraud charges at least once before. <\/p>\n

The SEC has complained that settling is more affordable for it than going to court. However, even as the Commission has turned to Congress for tougher laws against fraud as well as increased penalties, why have nearly half of the waivers it has granted gone to Wall Street firms that have settled fraud charges in the past with the promise to never violate those laws again? That\u2019s what many want to know.<\/p>\n

S.E.C. Is Avoiding Tough Sanctions for Large Banks<\/a>, The New York Times, February 3, 2011 <\/p>\n

SEC Seeks to Impose Tougher Penalties for Securities Fraud, Institutional Investor Securities Fraud, December 29, 2011<\/p>\n

SEC Issues Emergency Order to Stop $26M \u201cGreen\u201d Ponzi Scam, Institutional Investor Securities Fraud, October 13, 2011<\/p>\n

Securities and Exchange Commission Charges Investment Adviser with Committing Securities Fraud on LinkedIn<\/a>, Stockbroker Fraud Blog, January 6, 2012\n<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

According to The New York Times, by allowing that there be exemptions to certain regulations and laws, the Securities and Exchange Commission is letting Goldman Sachs, JPMorganChase, Bank of America, and other large financial firms avoid the liability that is supposed to come with losing securities fraud lawsuits while still making it possible for them […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3760,3761],"tags":[],"class_list":["post-5278","post","type-post","status-publish","format-standard","hentry","category-sec-enforcement","category-securities-and-exchange-commis"],"yoast_head":"\nDespite Tougher Investigations, SEC is Still Letting Wall Street Firms Avoid Punishments for Financial Fraud — Investor Lawyers Blog — January 29, 2012<\/title>\n<meta name=\"description\" content=\"According to 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