The standard practice of punishing corporate malfeasance with fines of hundreds of millions of dollars while allowing the corporations "to neither admit nor deny guilt" has always driven me crazy. The practice is intended to help corporations fend off later lawsuits from shareholders or others harmed by the wrongdoing, but protecting institutions that have clearly done wrong should not be a concern of federal prosecutors.
"Federal regulators are seeking to level civil charges against JPMorgan Chase and extract a rare admission of wrongdoing from the nation’s biggest bank as an investigation into a multibillion-dollar trading loss enters its final stage.
If JPMorgan concedes to some wrongdoing in a settlement, such an admission would set an important precedent for the Securities and Exchange Commission, coming after decades of allowing defendants to “neither admit nor deny wrongdoing.”
.... The rare push for an admission of wrongdoing stems from a policy change championed by the S.E.C.’s new chairwoman, Mary Jo White, a former federal prosecutor and Wall Street defense lawyer.
The leaders of the SEC enforcement unit, George Canellos and Andrew Ceresney, detailed the shift in a memo in June, saying some cases might “justify requiring the defendant’s admission of allegations in our complaint.”
The Times piece makes a couple of other important points. White and Ceresney, two of the architects of this long overdue change of SEC policy, had to recuse themselves from the particular case in question because when they were in private practice, the two had done work for JPMorgan, further testament to the incestuous nature of the financial community and those who attempt to regulate them. And it would appear that a lot of other Wall Street lawyers are getting their own chance to rack up billable hours for JPMorgan.
"Yet it is hardly JPMorgan’s only legal woe. Losing its status as Washington’s favorite bank, JPMorgan has drawn scrutiny over the last couple years, including inquiries from at least eight federal agencies, a state regulator and two European nations.
In addition to the trading loss, the authorities are investigating the bank in connection with its financial crisis-era mortgage business. The bank, for example, disclosed on Wednesday that it faced a criminal and civil investigation from federal prosecutors in California, who questioned whether it sold shoddy mortgage securities to investors before the financial crisis."
That might involve a lot of neither denying nor admitting guilt.
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