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NY Times -- DealB%k with Founder Andrew Ross Sorkin: Prosecutors Suspect Repeat Offenses on Wall Street By BEN PROTESS and JESSICA SILVER-GREENBERG

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Prosecutors Suspect Repeat Offenses on Wall Street
By BEN PROTESS and JESSICA SILVER-GREENBERG OCTOBER 29, 2014 3:56 PMOctober 29, 2014 3:56 pm 431 Comments
Photo
From left, Benjamin M. Lawsky, New York State’s banking regulator, is taking a fresh look at old cases and negotiating new settlements, as are the federal prosecutor Leslie R. Caldwell in Washington and Cyrus R. Vance Jr., district attorney in Manhattan.Credit Hiroko Masuike/The New York Times, Pablo Martinez Monsivais/Associated Press and Justin Lane/European Pressphoto Agency

It would be the Wall Street equivalent of a parole violation: Just two years after avoiding prosecution for a variety of crimes, some of the world’s biggest banks are suspected of having broken their promises to behave.

A mixture of new issues and lingering problems could violate earlier settlements that imposed new practices and fines on the banks but stopped short of criminal charges, according to lawyers briefed on the cases. Prosecutors are exploring whether to strengthen the earlier deals, the lawyers said, or scrap them altogether and force the banks to plead guilty to a crime.

That effort, unfolding separately from a number of well-known investigations into Wall Street, has ensnared several giant banks and consulting firms that until now were thought to be in the clear.

Prosecutors in Washington and Manhattan have reopened an investigation into Standard Chartered, the big British bank that reached a settlement in 2012 over accusations that it transferred billions of dollars for Iran and other nations blacklisted by the United States, according to the lawyers briefed on the cases. The prosecutors are questioning whether Standard Chartered, which has a large operation in New York, failed to disclose the extent of its wrongdoing to the government, imperiling the bank’s earlier settlement.

A branch of the Bank of Tokyo-Mitsubishi UFJ in Tokyo.Credit Yuriko Nakao/Reuters

New York State’s banking regulator is also taking a fresh look at old cases, reopening a 2013 settlement with the Bank of Tokyo-Mitsubishi UFJ over accusations that the bank’s New York branch did business with Iran, according to the lawyers who were not authorized to speak publicly.

The regulator, Benjamin M. Lawsky, the lawyers said, is negotiating a new settlement deal with the bank that, if it goes through, would involve a penalty larger than the $250 million it paid last year. Mr. Lawsky suspects that the bank initially played down the scope of its wrongdoing.

PricewaterhouseCoopers, the influential consulting firm that advised the Japanese bank on that case, is also under investigation, according to the lawyers briefed on the matter. The Manhattan district attorney’s office is examining whether the firm watered down a report about the bank’s dealings with Iran before it was sent to government investigators.

Those developments, not previously reported, are part of a broader revisiting of settlements with some of the world’s biggest banks, an effort that has focused on foreign banks but could eventually spread to American institutions.

As reported earlier by The New York Times, prosecutors are also threatening to tear up deals with banks like Barclays and UBS that were accused of manipulating interest rates, pointing to evidence that the same banks also manipulated foreign currencies, a violation of the interest rate settlements. The prosecutors and banks have agreed to extend probationary periods that would have otherwise expired this year.

The reopening of these cases represents a shift for the government, the first acknowledgment that prosecutors are coming to terms with the limitations of how they punish bank misdeeds. Typically, when banks have repeatedly run afoul of the law, they have returned to business as usual with little or no additional penalty — a stark contrast to how prosecutors mete out justice for the average criminal.

When punishing banks, prosecutors have favored so-called deferred-prosecution agreements, which suspend charges in exchange for the bank’s paying a fine and promising to behave. Several giant banks have reached multiple deferred or nonprosecution agreements in a short span, fueling concerns that the deals amount to little more than a slap on the wrist and enable a pattern of Wall Street recidivism.

Even now that prosecutors are examining repeat offenses on Wall Street, they are likely to seek punishments more symbolic than sweeping. Top executives are not expected to land in prison, nor are any problem banks in jeopardy of shutting down.

Still, fearing a certain fallout from the new round of scrutiny, banks have bolstered their legal teams. Standard Chartered, for instance, has retained one of the most lauded litigators in the country, Theodore V. Wells Jr., to work on the reopened sanctions case, according to the lawyers briefed on the matter.

The decision to revisit the cases also draws attention to consulting firms that helped shape the original settlements. When determining the extent of wrongdoing at a bank, the government often relies on assessments from consultants that are handpicked and paid by the same bank.



The regulator, Benjamin M. Lawsky, the lawyers said, is negotiating a new settlement deal with the bank that, if it goes through, would involve a penalty larger than the $250 million it paid last year. Mr. Lawsky suspects that the bank initially played down the scope of its wrongdoing.

PricewaterhouseCoopers, the influential consulting firm that advised the Japanese bank on that case, is also under investigation, according to the lawyers briefed on the matter. The Manhattan district attorney’s office is examining whether the firm watered down a report about the bank’s dealings with Iran before it was sent to government investigators.

Those developments, not previously reported, are part of a broader revisiting of settlements with some of the world’s biggest banks, an effort that has focused on foreign banks but could eventually spread to American institutions.

As reported earlier by The New York Times, prosecutors are also threatening to tear up deals with banks like Barclays and UBS that were accused of manipulating interest rates, pointing to evidence that the same banks also manipulated foreign currencies, a violation of the interest rate settlements. The prosecutors and banks have agreed to extend probationary periods that would have otherwise expired this year.

The reopening of these cases represents a shift for the government, the first acknowledgment that prosecutors are coming to terms with the limitations of how they punish bank misdeeds. Typically, when banks have repeatedly run afoul of the law, they have returned to business as usual with little or no additional penalty — a stark contrast to how prosecutors mete out justice for the average criminal.

When punishing banks, prosecutors have favored so-called deferred-prosecution agreements, which suspend charges in exchange for the bank’s paying a fine and promising to behave. Several giant banks have reached multiple deferred or nonprosecution agreements in a short span, fueling concerns that the deals amount to little more than a slap on the wrist and enable a pattern of Wall Street recidivism.

Even now that prosecutors are examining repeat offenses on Wall Street, they are likely to seek punishments more symbolic than sweeping. Top executives are not expected to land in prison, nor are any problem banks in jeopardy of shutting down.

Still, fearing a certain fallout from the new round of scrutiny, banks have bolstered their legal teams. Standard Chartered, for instance, has retained one of the most lauded litigators in the country, Theodore V. Wells Jr., to work on the reopened sanctions case, according to the lawyers briefed on the matter.

The decision to revisit the cases also draws attention to consulting firms that helped shape the original settlements. When determining the extent of wrongdoing at a bank, the government often relies on assessments from consultants that are handpicked and paid by the same bank.

The offices of PricewaterhouseCoopers in New York.Credit Andrew Renneisen/The New York Times

The Bank of Tokyo-Mitsubishi case demonstrated the potential pitfalls of that approach. When Mr. Lawsky made his initial $250 million settlement with the bank last year, the punishment was based partly on an outside consultant’s estimate of the illegal dealings. But the New York State regulator has since uncovered emails indicating that the consultant, PricewaterhouseCoopers, watered down the report under pressure from the bank, according to regulatory records.

In August, Mr. Lawsky imposed a $25 million penalty on PricewaterhouseCoopers, which said at the time that the report was “detailed” and “disclosed the relevant facts.”

After that settlement, people briefed on the matter said, prosecutors at the Manhattan district attorney’s office opened an investigation into the work that PricewaterhouseCoopers did for the Japanese bank, a previously unreported development. Already, the prosecutors have requested the consulting firm’s records in the case.

The investigations, the people said, also unearthed emails showing that PricewaterhouseCoopers changed the report not only at the suggestion of the bank, but also at the behest of lawyers working on the bank’s behalf. Like many banks caught in the government’s cross hairs, the Bank of Tokyo-Mitsubishi turned to Sullivan & Cromwell, an elite law firm as woven into the fabric of Wall Street as the banks it represents. Sullivan & Cromwell also represented Standard Chartered in the bank’s 2012 settlement with the Justice Department in Washington and the district attorney’s office in Manhattan.
Credit

More recently, the government has grown skeptical of the argument that some banks are simply too big to charge, an argument that Sullivan & Cromwell often employs for its clients. That argument was tested in a recent case against BNP Paribas, the giant French bank accused of processing billions of dollars for Sudan and Iran.

At a meeting in Washington this year, a lawyer from Sullivan & Cromwell cautioned prosecutors about the potential fallout from BNP pleading guilty to a crime, according to people briefed on the meeting. To illustrate the concern, the lawyer presented prosecutors with a fake newspaper article reporting that a huge bank had pleaded guilty for the first time in decades. The hypothetical report detailed what regulatory problems could befall the bank if prosecutors did not lower their demands for a fine and take precautions when extracting a plea.

Weeks later, after lowering the fine to $8.9 billion, the prosecutors forced the bank to plead guilty. Far from reporting a crisis, BNP’s chief executive that day noted that the bank “will once again post solid results this quarter.”

Not every bank will have to plead guilty in future cases. Prosecutors still see benefits from deferred-prosecution agreements, which can require banks to install independent monitors and more broadly overhaul their practices than in the event of a guilty plea.

Lawmakers and other critics, however, contend that the agreements can lack teeth, begetting a pattern of misbehavior.

Jonathan Ashley, center, and participants of the University of Virginia School of Law’s First Amendment clinic.Credit Jay Paul for The New York Times

Since 2001, at least eight big banks have committed further offenses after receiving an initial deferred-prosecution agreement, according to data assembled by Brandon L. Garrett, a University of Virginialaw school professor and author of the book, “Too Big to Jail: How Prosecutors Compromise With Corporations.”

UBS has reached three deferred or nonprosecution agreements since 2009. On Tuesday, the Swiss bank said it had reached an agreement with the Justice Department to extend by another year a two-year nonprosecution agreement that was scheduled to expire in December.

The cycle of misbehavior is difficult to break.

Regulators and prosecutors blame a culture that prioritizes profit over compliance. And as banks have grown larger, and more international, illegality can stop in one unit of a bank even as it flourishes in another.

The offices of Standard Chartered bank in London.Credit Facundo Arrizabalaga/European Pressphoto Agency

Standard Chartered is at risk of becoming Exhibit A of corporate backsliding. The Justice Department’s criminal division in Washington and the district attorney’s office in Manhattan, which settled with Standard Chartered in 2012 over its business dealings with Iran, are exploring whether the bank repeatedly violated that deferred-prosecution agreement.

The bank, which declined to comment for this article, previously said it was “cooperating with all relevant ongoing reviews, requests for information and investigations.”

The prosecutors, Leslie R. Caldwell in Washington and Cyrus R. Vance Jr. in Manhattan, have not decided whether to take additional action against the bank. But as an initial step, lawyers briefed on the matter said, they are expected to extend the length of the deferred-prosecution agreement, which would have otherwise expired in December. In an August regulatory filing, the bank acknowledged that the agreement “is likely to be extended.”

The prosecutors are questioning whether the bank underestimated the amount of its improper dealings with Iran, according to the lawyers briefed on the matter. In the course of an investigation into another bank, the lawyers said, evidence emerged that Standard Chartered had processed other transactions that it did not relay to the government. And because the 2012 settlement agreement applied only to transactions that had “already been disclosed,” the discovery of additional illegal transactions could scuttle the deal.

The prosecutors also took notice of Mr. Lawsky’s recent decision to file his second case against Standard Chartered in two years, faulting the bank for breakdowns in a computer system that was supposed to catch suspicious transactions. In August, Mr. Lawsky fined the bank $300 million for the lingering compliance woes, a penalty that came in addition to the $340 million the bank paid Mr. Lawsky’s agency in 2012.

It didn’t take long for concerns to arise. Just weeks after the bank settled in late 2012, its chairman appeared to violate a provision of the deal that forbade Standard Chartered executives from issuing “any public statement contradicting the acceptance of responsibility.”

In a conference call, the chairman referred to the illicit transactions as “clerical errors” — comments he later retracted.


A version of this article appears in print on 10/30/2014, on page A1 of the NewYork edition with the headline: Repeat Offenses Are Suspected on Wall Street

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“High-Functioning” Bipolar Disorder posted on January 17, 2011 by Natasha Tracy "So all the appearance of my functioning is paid for by utter decimation and exhaustion the rest of the time. I don’t have energy or brain space left to read, see friends, date or do pretty much anything else. The last thing I want to do is leave the house. I want to sleep. Forever. And ever. I do know wonderful people and I do adore them. But that doesn’t overcome the inertia of having every drop of energy sucked from me so I can pay rent."

“High-Functioning” Bipolar DisorderPosted on January 17, 2011 by Natasha Tracy

"So all the appearance of my functioning is paid for by utter decimation and exhaustion the rest of the time. I don’t have energy or brain space left to read, see friends, date or do pretty much anything else. The last thing I want to do is leave the house. I want to sleep. Forever. And ever.

I do know wonderful people and I do adore them. But that doesn’t overcome the inertia of having every drop of energy sucked from me so I can pay rent."


Sometimes people don’t believe I’m particularly sick. They meet me, I look fine, I interact, I charm, I wit and all seems, if not normal, at least something reasonably normal adjacent.

And that’s fine. It’s by design. Being a high-functioning mentally ill person, I can’t really afford to run around with my hair on fire. But faking normalcy, happiness and pleasure is a tricky and very expensive bit of business.


High-Functioning Bipolar

Being a “high-functioning” bipolar doesn’t really have a definition, per se. The term indicates that I’m not in a mental hospital, and I do things like live on my own, pay rent, work and whatnot. I would suggest that being “high-functioning” seems to indicate that I can fake not being a crazy person.
High-Functioning Weekdays
It’s really important that I be able to put my bipolar on the shelf. I have to be able to put the crazy away so that I can talk to people, engage in business, produce technical documentation, write articles and so on. I wrote about 12,000 words last week for clients. You can’t do that if you’re pondering where on your wrist the best place to slice is.


Low-Functioning Weekends

The trouble is, using all my control, sanity and energy during the week to try and produce enough work to pay my rent then leaves me with a really large deficit when I’m not working. I’m crazy. Remember? Not normal? I’m just faking the normal. And faking normal requires more effort than you can possibly imagine.

So then, as soon as I’m not working, I break into a thousand pieces all over the tiles on my kitchen floor.

Sure, you go out Friday night with friends. My Friday night is usually spent fairly catatonic trying desperately not to get suicidal.
Energy is Finite, Bipolar is Exhausting

As I see it, everyone has a similar tank of energy. We expend that energy in lots of ways. We run after kids, we go to the office, we jump out of planes. All fine uses of energy. Me, on the other hand, I spend a massive amount of energy just trying to keep my brain in one place. I have almost no energy, or brain left, outside of that.
I Give Up a Life to Survive

So all the appearance of my functioning is paid for by utter decimation and exhaustion the rest of the time. I don’t have energy or brain space left to read, see friends, date or do pretty much anything else. The last thing I want to do is leave the house. I want to sleep. Forever. And ever.

I do know wonderful people and I do adore them. But that doesn’t overcome the inertia of having every drop of energy sucked from me so I can pay rent.
Bipolar Sucks the Life You Don’t See
I’m the least fun person in the world. I work. I sleep. I have a schedule. I keep that schedule. I’m tired. I make excuses not to go out. I’m sort of the lamest person ever.

But that’s the mental illness sucking the life out of my ears. I want to go out. I want to see my friends. I want to do something fun. I want to have a drink with you after work. I just can’t. I’m too tired.

So yes. I’m capable. I’m talented. I work hard. I produce stuff. Yay me. But the price I pay for that is not being able to be anything else.

You can find Natasha Tracy on Facebook or GooglePlus or @Natasha_Tracy on Twitter or at the Bipolar Burble, her blog.


his entry was posted in Being Crazy, Coping, Depression, How Others See Bipolar, Impact of Bipolar, Understanding Mental Illness and tagged Bipolar Disorder, Crazy, Depression, Honest About Bipolar, I Have Bipolar Disorder, Mental Illness, Public, Routine, Understanding Illness. Bookmark the permalink.