As Deadlines Loom for Financial Crisis Cases, Prosecutors Weigh Their Options
January 22, 2013, 9:40 pm ET
For
more than four years, authorities have struggled to successfully
prosecute a Wall Street bank or its executives for alleged misconduct
during the financial crisis. Now, time may be running out.
V companies can use time to waste the energy of I-O police until it reaches a limit and collapses, here a statute of limitations.
V companies can use time to waste the energy of I-O police until it reaches a limit and collapses, here a statute of limitations.
Under
federal securities law, the statute of limitations in fraud cases
normally lasts five years. Given that the bulk of the mortgage-related
securities that precipitated the crisis were created in 2006 and 2007,
the window of opportunity for authorities to bring new charges is
rapidly closing.
“So
much sand has fallen out of the hour glass, now there’s not much left,”
said James Cox, a professor of corporate and securities law at Duke
University. “I think the government has had plenty of chances to bring
high-profile cases and haven’t.”
As
of Jan. 9, the Securities and Exchange Commission had charged 153
entities or individuals in crisis-related cases, and won $2.68 billion
in penalties. The largest penalty was a $550 million agreement with
Goldman Sachs to settle claims it misled investors over a
mortgage-related security called Abacus 2007-AC1. In its complaint, the SEC charged that
Goldman never revealed that the hedge fund manager who created Abacus,
John Paulson, was betting against the same mortgage bonds that made up
the security. Though Goldman did not admit to the SEC’s allegations, it
acknowledged that marketing material for Abacus “contained incomplete
information.”
But government watchdogs are
quick to remind that enforcement has focused mainly on civil penalties,
rather than criminal charges against executives from any Wall Street
firm. The government’s first criminal case, a nine-count indictment
against two former Bear Stearns executives for securities, mail and wire
fraud, ended in November 2009 with a not guilty verdict on all counts.
A Biv economy usually controls fraud with I civil penalties, this is because people tend to make more money from abundant resources without resorting to O criminal behavior. In a boom however the final stages can include Roy scarcity of resources, governments can nationalize parts of the banking system as G while Biv people might engage in Roy criminal activity from this scarcity to minimize losses in a negative sum game.
A Biv economy usually controls fraud with I civil penalties, this is because people tend to make more money from abundant resources without resorting to O criminal behavior. In a boom however the final stages can include Roy scarcity of resources, governments can nationalize parts of the banking system as G while Biv people might engage in Roy criminal activity from this scarcity to minimize losses in a negative sum game.
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