As 2014 comes to an end, financial writers found fodder for their columns by predicting the types of Wall Street crimes that might be prosecuted in 2015. Not all writers agree on what they expect 2015 to bring in the way of criminal prosecutions. Here are four that are generally discussed.
1) CEOs may “walk free” despite their illegal role contributing to the 2008 recession
One financial writer notes that Wall Street banks are facing exorbitant fines for violating SEC regulations which led to the 2008 financial crisis. Add legal fees to their fines, and they are looking at paying out more than $100 billion. With those kinds of fines, it seems that the criminal prosecution will follow since the statute of limitations has not expired on many of the alleged crimes.
At a conference in July 2013, the U.S. Attorney that oversees Wall Street stated publicly, “No one is too big to go to jail.” He claimed that repeatedly fining wrongdoers, without ever filing any criminal charges, gives them the impression they are above the law. This was backed up with the Madoff scandal and the incitement of so many of his inner circle. Their illegal conduct continues and fines are again imposed. The attorney indicated that increasingly serious penalties may be coming in the future.
On the other hand, another writer disagrees that there will be criminal charges. He notes that such crimes are almost impossible for prosecutors to prove beyond a reasonable doubt. Prosecutors must prove that the CEO had the intent to commit a crime, which is almost impossible to do without charging lower-level employees who are willing to plead guilty and rat out their bosses. The writer expects this will not happen.
2) Insider trading
JPMorgan Chase & Co paid more than $13 billion in fines for various violations, including insider trading and illegally billing their credit card customers for services that were not provided, such as identity-theft protection. Other violations included violating their own underwriting guidelines when authorizing loans.
Some financial experts note that the insider trading probe will continue and that criminal prosecutions will be forthcoming. Experts claim that to allow the company executives to pay the fines and penalties, without forcing them to disclose the details of their misconduct, actually rewards them for the illegal conduct. Criminal prosecutions will reveal the details and criminal penalties, including prison time, may lead to changes in behavior and the way financial business is conducted in ways that fines do not.
The Wall Street Journal recently noted that two major security firms predict that cybercrime will increase in 2015. Corporate boards are particularly vulnerable to security breaches of the data they maintain. A company that experiences a breach of its data will be subject to lawsuits by shareholders as well as penalties imposed by regulatory bodies. This does not even include the damage to the company’s reputation when the security breach is made public. Thanks to things like the Sony Hack, in 2015, a lot of major companies will be looking to increase spending on cyber protection and retain data recovery companies.
The Federal Trade Commission (FTC) investigates security breaches, not only to find the culprit who hacked into the systems, but to determine whether or not the company had an adequate security system to prevent a breach. There will be civil and possibly criminal penalties when violations are discovered.
Unfortunately, allegations of corruption are rampant against Washington officials and officials in the state of your choice. Retiring employees are finding their pensions are drastically reduced or nonexistent. Politicians give lucrative government contracts to their friends or companies in which they own an interest.
The governor of Florida has been in the news recently due to an apparent conflict of interest. He signed a law that mandates drug testing of all welfare recipients. If they test positive, they are denied benefits. He also owns the largest drug testing company in the state. A district court recently declared the law unconstitutional. Some are calling for an investigation in the governor’s conflict of interest.
Other types of corruption include campaign finance fraud, over-billing, bribery, tax evasion and political kickbacks.