Lincoln Assassinated and HSBC’s Continued Self-Inflicted Woes

Today is the 150^th anniversary of the first successful Presidential assassination attempt. It was on this day in 1865 that John Wilkes Booth shot President Abraham Lincoln at Ford’s Theater in Washington DC. Booth was not a lone gunman but led a group of Confederate sympathizers who attacked or planned to attack leading US government officials. Co-conspirator Lewis T. Powell burst into Secretary of State Seward’s home, repeatedly stabbing him and seriously wounding him and three others, while George A. Atzerodt, assigned to kill Vice President Johnson, lost his nerve and fled.

HSBC continues to stay in the news, unfortunately largely for the wrong reasons in the realm of anti-corruption, facilitating tax evasion and money laundering. In an article in the New York Times (NYT), entitled “HSBC Is Deemed Slow To Carry Out Changes”, reporters Jessica Silver-Greenberg and Ben Protess noted that earlier this month, federal prosecutors made a quarterly count filing as a part of their report on the bank’s Deferred Prosecution Agreement (DPA) “faulting the bank for weaknesses in spotting suspicious transactions and for enabling a corporate culture resistant to change.”

The filing itself was based upon the corporate monitor’s Michael Cherkasky’s “confidential 1000 page report submitted to prosecutors in January. That report, people briefed on the matter said, offered a more scathing assessment of the bank’s progress.” The monitor has been “evaluating HSBC’s global operations for cracks in its money-laundering controls. As such, he has reviewed the bank’s various business lines, including its sprawling operations in China.”

In the technology area, the filing noted the “bank’s technology systems, despite some improvement, still suffer from “fragmentation” and “lack of connectivity” the Justice Department filing said. With its creaky framework, the filing said, “the collection and analysis” of data could suffer.” This lack of technology to both check on customers or potential customers and then review the transactions they might engage in were a prime deficiency noted in the original 2012 enforcement action where “prosecutors found that HSBC facilitated money laundering on behalf of Mexican drug cartels, allowing at least $881 million in tainted money to course through its United States branches.”

But perhaps the more troubling finding in the prosecutors filing was around the culture at the bank. There was not specific criticism of the tone at the top of the bank or with senior management but with the employees’ attitudes towards meeting the obligations under the DPA. The filing said that “Change at the bank was met with resistance” providing at least one example; “When presented with negative findings from auditors, the filing said, managers at the bank’s United States unit for global banking and markets “inappropriately pushed back.” Ultimately, the resistance caused an internal audit report “to be more favorable to the business than it would have been otherwise.”

Interestingly HSBC itself pushed back against the government’s filing, at least in the press. The article noted that “In response to the filing, Stuart Levey, the bank’s chief legal officer said, “The Justice Department recognized in its letter that HSBC has made material progress toward meeting the most stringent compliance standards imposed to date upon a global financial institution.” Levey also said that “the bank was continuing to meet all its obligations under the deferred-prosecution-agreement and that its leaders “are making progress toward that objective and appreciate the monitor’s ongoing work.””

Monitor Cherkasky’s report and the Department of Justice (DOJ) filing bring up a couple of interesting points for speculation. The first is the continuing dialogue and debate on the effectiveness of DPAs and whether they actually do achieve their stated goals of changing corporate culture and behavior. The NYT article said that the DOJ filing, which came under the name of the President’s Attorney General-designee, as head of the US Prosecutor’s office, comes “at a time when prosecutors are grappling with repeat offenders on Wall Street”. Moreover, “the filing underscores the Justice Department’s efforts to stem the pattern of corporate recidivism.” Just how hard should the DOJ come down on HSBC? There are other more aggressive steps the DOJ could take, even at this point. These include “extending the five-year deferred-prosecution agreement or singling out culpable employees by name.” Indeed the article cited to a recent speech by the head of the DOJ’s criminal division, Deputy Assistant Attorney General Leslie Caldwell, where she said, “the government has “a range of tools” to deal with corporate recidivism, including extending the term of a deferred-prosecution agreement while prosecutors investigate accusations of new criminal conduct.”

How about tearing up the DPA and simply criminally prosecuting the bank on the facts it admitted to in the DPA? Caldwell also spoke to that possibility when she said in the same speech, “Make no mistake: The criminal division will not hesitate to tear up a D.P.A. or N.P.A and file criminal charges where such action is appropriate and proportional to the breach.” Since parties are required to agree to facts in any DPA or Non-Prosecution Agreement (NPA) it would seem that tearing up those settlement documents and then prosecuting those companies on the underlying facts would be a relatively straightforward matter.

The other party in this debate is the Attorney General-nominee herself. While at this point it is not clear if the GOP majority will ever let her nomination come up for a vote before the full Senate, what if the Senate Judiciary Committee decides to reopen the hearings on this issue and then shoehorn it into the larger ongoing academic and FCPA Inc. debate on DPAs (and NPAs and other settlement tools). What if the FCPA testified on the “Façade of FCPA Enforcement”? What if Ted Cruz came in to ask why the DOJ is even bothering to prosecute the British banking giant?

At the time of its settlement in 2012, the HSBC fine was the largest for any bank involving money laundering. The monitor’s report and DOJ court filing demonstrate that the settlement is still controversial and the conduct engaged in by the bank many years ago may well continue to resonate up to this day and well into the future.

But the negative news for HSBC did not end with the filing of the DOJ report. As reported in the Financial Times (FT), in an article entitled “French magistrates open formal criminal probe into HSBC”, Emma Dunkley wrote that the parent entity of the bank, HSBC Holdings, “has been placed under criminal investigation by French authorities and made to post €1bn bail over allegations that its Swiss private banking arm helped clients avoid taxes.” This is separate and apart from the investigations into the company’s Swiss banking unit, which has been indicted or is under investigation “over tax evasion allegations in several other countries, including the US, Belgium and Argentina.”

In another article in the NYT, entitled “HSBC Facing Criminal Investigation in French Tax Case”, Chad Bray reported that the bank apologized after released documents “showed that its employees had reassured clients that the lender would not disclose details of their accounts to the tax authorities of their home countries and discussed options to avoid paying taxes on those assets. The bank has acknowledged previous “conduct and compliance failures” in its Swiss business and has said that it has overhauled its private banking business and reduced its client base in Switzerland by 70 percent since its peak.”

The woes of HSBC continue and indeed seem to be increasing. With the fallout from the monitor’s report and other ongoing investigations the bank may be in danger of having its DPA revoked. While HSBC is not the only poster child for Banks Behaving Badly it may find itself as the first bank to have its DPA torn up and either the entity or responsible individuals criminally prosecuted for recidivist behavior.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2015

As American as Duck Soup, the Marx Brothers and Stepping In It

I am at the end of my week of Marx Brothers themed posts. As you can tell, I am a huge fan and several of you have asked which is my favorite film. Before answering I must confess that I much prefer their Paramount films to their later MGM work. Their first two films were adaptations of the Broadway shows The Cocoanuts (1929) and Animal Crackers (1930), George S. Kaufman and Morrie Ryskind wrote both. Their third Paramount film, Monkey Business (1931), was their first movie not based on a stage production, and the only one in which Harpo’s voice is heard (singing tenor from inside a barrel in the opening scene). Number four was Horse Feathers (1932), where they brothers satirized the American college system and Prohibition, the amateur status of college football players, and placed them the cover of Time.

But for me it is their final Paramount film, Duck Soup (1933), which was their greatest and my personal favorite. It was directed by the highly regarded Leo McCarey, is the highest rated of the five Marx Brothers films on the American Film Institute’s top 100 years … 100 Movies list. It had slapstick, singing and dancing, atrocious puns and just about every other form of top-notch comedy one can ask for in a movie. The absurdity of the film and the nature of the Marx Brothers comedy seems to me to be summed up in a dispute the film sparked between the Brothers and the village of Fredonia, New York. “Freedonia” was the name of a fictional country of which Groucho was the President and the city fathers wrote to Paramount and asked the studio to remove all references to Freedonia because “it is hurting our town’s image”. Groucho fired back a sarcastic retort asking them to change the name of their town, because “it’s hurting our picture.”

I thought about this comedic phenomenon when I read several articles about JP Morgan Chief Executive Officer (CEO) Jamie Dimon and his whining about how tough regulators have been on him and his poor little bank. An article in the Financial Times (FT) Lex Column, entitled “JPMorgan: comic relief”, said, “A rule of thumb for JPMorgan earnings: the more entertaining chief executive Jamie Dimon is on the conference call, the limper the results. Yesterday, he riffed on [among other things]: what is un-American (the bank being chased by many regulatory bodies rather than just one)”. This was in the face of a report in another FT article by Tom Braithwaite, entitled “High quality global journalism requires investment”, that the bank “said its earnings have been hit by $1.1bn in new legal charges, as it prepares to settle over allegations of foreign exchange manipulation with the Department of Justice. This latest sum takes the total legal charges disclosed by the US’s largest bank since 2010 to more than $25bn, or more than a year’s profits. “Banks are under assault,” said Jamie Dimon, chief executive, as he reported fourth-quarter results on Wednesday.”

Dimon’s seeming insistence that banks following laws is un-American and the attendant cost of doing business in compliance with relevant anti-money laundering (AML) laws still seems to bedevil a fellow mega-bank, HSBC Holdings PLC, which paid a paltry fine of $1.9 billion (paltry that is next to JPMorgan) for its transgressions and violations of that un-American prohibition against money-laundering. In an article in the Wall Street Journal (WSJ) Rachel Louise Ensign and Max Colchester reported that after a two-year monitorship, the independent monitor will issue a report that “will criticize the bank and lay out ways it needs to improve.” This is in the face of the 2014 monitor’s report that HSBC “information-technology systems still lacked ‘integration, coordination and standardization’ and recommending that senior executives have their bonuses docked absent progress.” The monitor also said that “Throwing bodies at it and putting your finger in the dike-that’s not a sustainable system.”

What has been HSBC’s response to this news? Apparently with the same whining as Dimon but rather than focus on the fact they have to follow laws, HSBC focused on the actual doing of compliance. The article said that the new Chief Compliance Officer (CCO) Joe Evan, a former Drug Enforcement Administration official, “surprised some colleagues by spitting tobacco juice into a cup while in the office”; perhaps they are just anti-tobacco. However even such simple messaging techniques as screen savers with the AML reminders to “Ask The Right Question” have been derided at HSBC. Even the head of the bank’s AML compliance was quoted as having said “But money laundering happens in financial institutions. How do you reconcile appetite with reality?”

Now contrast this incessant whining with the recent change in tactics by one of the few remaining financial meltdown enforcement actions left, that being the Department of Justice’s (DOJ) case against Standard & Poor (S&P). In an article in the New York Times (NYT), entitled, “S.&P. Nears Settlement With Justice Over Crisis”, Ben Protess reported that S&P has been accused by the DOJ “of awarding inflated credit rating to mortgage investments that spurred the financial crisis”. S&P initially had aggressively fought the lawsuit, Protess noted, and attacked the government case in the press. S&P had hired noted First Amendment lawyer Floyd Abrams to go on television to claim to link “the federal investigation to S.&P.’s decision in 2011 to cut the United States credit rating below the top grade of triple A.” Unfortunately for S&P they could not prove that defense, even after extensive discovery on the issue. But their tune has recently changed, “After S.&P. mounted a two-year campaign to defeat civil fraud charges — portraying them as retaliation for cutting the credit rating of the United States — the ratings agency is now negotiating with the Justice Department to settle the case, according to people briefed on the matter.”

But the real problem for S&P is that they could have settled two years ago, before suit was filed. Protess said, “The government offered S.&P. roughly the same settlement size, $1 billion plus, before filing suit two years ago. If S.&P. had embraced that offer, instead of fighting accusations that it abused its role as a rating agency, it could have walked away without accumulating tens of millions of dollars in legal fees.” Moreover, by not settling pre-suit, S&P has subjected itself to the new reality of settling suits with an admission of liability, never good for those pesky follow-on shareholder actions. Further, “more than a dozen state attorneys general are demanding that S.&P. pay more than $1 billion to settle the case, the people briefed on the matter said, a penalty large enough to wipe out the rating agency’s entire operating profit for a year.”

Are banks and rating entities inherently arrogant or do they simply face that age-old foe that many people face today, dog excrement? As Dimon said in his earnings call, and was quoted in the FT’s Lex Column, sometimes “even JP Morgan will step into it on occasion”.

If you want to avoid stepping in it this weekend, I suggest you settle in and watch some old Marx Brothers movies.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2015

The HSBC AML Settlement – Lessons Learned for the AML Compliance Practitioner

I recently wrote about banks behaving badly. Currently, Exhibit A in that list is HSBC. In December, 2012, the UK banking giant HSBC agreed to pay a fine of $1.92 billion for its transgressions involving money laundering. Today I want to look at the violations which the company engaged in and its resolution.

I.                   HSBC AML Violations

Regarding the HSBC AML claims there were four major areas of money laundering violations by HSBC. As listed in the Statement Facts to the Deferred Prosecution Agreement (DPA) they read:

10. There were at least four significant failures in HSBC Bank USA’s AML program that allowed the laundering of drug trafficking proceeds through HSBC Bank USA:

1. Failure to obtain or maintain due diligence or KYC information on HSBC Group Affiliates, including HSBC Mexico;
2. Failure to adequately monitor over $200 trillion in wire transfers between 2006 and 2009 from customers located in countries that HSBC Bank USA classified as “standard” or “medium” risk, including over $670 billion in wire transfers from HSBC Mexico;
3. Failure to adequately monitor billions of dollars in purchases of physical U.S. dollars (“banknotes”) between July 2006 and July 2009 from HSBC Group Affiliates, including over $9.4 billion from HSBC Mexico; and
4. Failure to provide adequate staffing and other resources to maintain an effective AML program.

We will review each of these in more depth to provide guidance to the AML compliance practitioner on the steps that their financial institution needs to take.

a.      HSBC Bank USA Failed to Conduct Due Diligence on HSBC Group Affiliates

One of HSBC Bank USA’s high risk products was its correspondent banking practices and services. Correspondent accounts were established at banks to receive deposits from, make payments on behalf of, or handle other financial transactions for foreign financial institutions. They are considered high risk because the US bank does not have a direct relationship with the clients and, therefore, has no diligence information on the foreign financial institution’s customers who initiated the wire transfers. To mitigate this risk, the Bank Secrecy Act (BSA) requires financial institutions to conduct due diligence on all non-US entities for which it maintains correspondent accounts. There is no exception for foreign financial institutions with the same parent company.

HSBC Bank USA was required under the BSA to conduct due diligence on all foreign financial institutions with correspondent accounts, including HSBC Group Affiliates, which it failed to do, from at least 2006 to 2010.  The decision not to conduct due diligence was guided by a formal policy memorialized in HSBC Bank USA’s AML Procedures Manuals.

b.      HSBC Bank USA Failed to Adequately Monitor Wire Transfers

From 2006 to 2009, HSBC Bank USA monitored wire transfers using an automated system called the Customer Account Monitoring Program (“CAMP”). The CAMP system would detect suspicious wire transfers based on parameters set by HSBC Bank USA under which various factors triggered review, in particular, the amount of the transaction and the type and location of the customer. However, HSBC Bank USA knowingly set the thresholds in CAMP so that wire transfers by customers located in countries categorized as standard or medium risk, including foreign financial institutions with correspondent accounts, would not be subject to automated monitoring unless the customers were otherwise classified as high risk.

Between 2000 and 2009, HSBC Bank USA, specifically disregarded numerous publicly available and industry-wide advisories about the money laundering risks inherent to Mexican financial institutions. These included the following:

1. The U.S. State Department’s designation of Mexico as a “jurisdiction of primary concern” for money laundering as early as March 2000;
2. The U.S. State Department’s International Narcotics Control Strategy Reports from as early as 2002 stating that Mexico was and continues to be one of the most challenging money laundering jurisdictions for the United States;
3. The April 2006 Financial Crimes Enforcement Network (“FinCEN”) Advisory concerning bulk cash being smuggled into Mexico and deposited with Mexican financial institutions;
4. The federal money laundering investigations that became public in 2007-08, involving Casa de Cambio Puebla, a Mexican-based money services business that had accounts at HSBC Mexico, and Sigue, a U.S.-based money services business, that had accounts at HSBC Mexico; and
5. The federal money laundering investigation into Wachovia for its failure to monitor wire transactions originating from the correspondent accounts of certain Mexican money services businesses, which became public in April 2008.

 c.       HSBC Bank USA Failed to Monitor Banknotes’ Transactions with HSBC Group Affiliates

HSBC Bank USA’s Banknotes business (“Banknotes”) involved the wholesale buying and selling of bulk cash throughout the world. The Banknotes business line was a high risk business because of the high risk of money laundering associated with transactions involving physical currency and the countries where some of its customers were located. In an attempt to mitigate these risks, Banknotes’ AML Compliance monitored customer transactions.  The purpose of transaction monitoring was to identify the volume of currency going to or coming from each customer and to determine whether there was a legitimate business explanation for buying or selling that amount of physical currency.

Despite the high risk of money laundering associated with the Banknotes business and FinCen advisories to the contrary, the HSBC Banknotes’ AML compliance consisted of one, or at times two, compliance officers. Unlike the CAMP system for wire transfers, Banknotes did not have an automated monitoring system, and, as a result, the Banknotes’ compliance officers were responsible for personally reviewing the transactions of approximately 500 to 600 Banknotes customers. These attempted reviews were deemed wholly insufficient.

d.      HSBC Bank USA Failed to Provide Adequate Staffing and Other Resources to Maintain an Effective AML Program

HSBC’s conduct regarding its AML policy was found to be completely wanting. Not only did the Bank fail to fill senior compliance officer positions after personnel left the Bank but it actually reduced the resources available to the compliance program by cutting funding in 2007. In 2008, the Chief Operating Officer (COO) for Compliance conducted an internal review of the AML compliance program and found it to be “behind the times” and noted that the program was under-resourced and understaffed. Despite these findings the Bank did not begin to address the resource problems until late 2009.

II.                HSBC Remedial Measures

The Department of Justice (DOJ) listed the remedial actions which HSBC engaged in that led, in part, to successfully avoiding a Criminal Indictment by the DOJ.

1. Change in Leadership and increase in resources. The Bank hired a new leadership team. In 2011, the Bank spent more than $244 on its compliance program. The Bank substantially increased the personnel in its compliance function from 92 full time employees and 25 consultants in 2010 to 880 full time employees and 267 consultants as of May 2012.
2. Claw Backs. The Bank ‘clawed back’ compensation from senior company executives.
3. Compliance Function. The Compliance Department was separated from the legal department and given direct reporting lines to the Board of Directors.
4. Exiting high risk business lines. The Bank exited the Banknotes business and ended 109 high risk business relationships.

The HSBC investigation and enforcement action took years and cost the Bank millions of dollars. The Bank ignored not only its internal compliance requirements but also outside information about the high risk nature of many of its business relationships. Banks must review their compliance programs to determine if any of the factors present in the HSBC matter are risks to their business models and remediate them as soon as possible to avoid a similar fate.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2013

Bastille Day and Recent Compliance Scandals: Where Will They End?

Saturday, July 14 was Bastille Day, the French national holiday which celebrates the storming of the Bastille prison during the early days of the French Revolution in 1789. Simply because a revolution does not succeed does not mean that it should not be celebrated and certainly the French people overthrowing centuries of royal rule for liberté, egalité and fraternité is an event to be recognized. I thought about what happened to the revolution of 1789 and its spiral downwards into the Terror of 1794 in looking back over the past two weeks of stunning revelations about corrupt practices behind three of the biggest scandals of recent note; the financial scandals involving the LIBOR manipulation by Barclay’s, the unraveling of the brokerage firm Peregrine Financial Group, Inc. and the money laundering violations admitted to by HSBC. The question that would seem to arise is will these three scandals end with the guillotine or a transition to transparency and the light of day with ethical cultures in embedded in these corporations?

In a July 17 article in the Financial Times (FT), entitled “Banks balance shifts towards the historical and ethical”, Patrick Jenkins wrote about HSBC and Barclay’s stating that “one thing is clear: the ethics of banking are broken. The question must now be: how can they be fixed?” Jenkins makes clear that while he does not question the personal integrity of the persons running those organizations, he notes that their tone-at-the-top was not up to snuff. He termed it “Too big to be trusted” because one of the reasons that he finds the ethical culture broken is that these organizations have simply gotten too big to adequately police themselves.

Jenkins identified three culprits for this problem. The first is “runaway acquisitions” where acquired companies are not integrated into the parent or acquiring organization. Second, he identifies a failure of corporate governance, in that Boards have failed to “challenge strategy and ask awkward questions.” Finally, he sees the remuneration model as one that has “long created incentives for dishonesty.”  Jenkins applauds British regulators’ push for “smaller cash bonuses, with long-term deferral” for senior management but believes that such trends need to be pushed down the corporate chain.

Writing in the July 17 Wall Street Journal (WSJ), in an article entitled “The Scandal Behind the Scandals”, Francesco Guerrera asked the following question: “Is this just a blip or are we at a breaking point that calls for a wholesale change in attitudes, and rules?” At least regarding the Peregrine Financial collapse he found that this scandal had undermined “the cornerstone of markets: trust between buyers and sellers.” And what of the regulators? Guerrera noted that “a few financial practitioners blamed regulators for failing to spot trouble.” Then, of course, there is Barclays’ former head Robert Diamond’s “everyone else is speeding defense” now coupled with the element that the regulators were in on it too. Guerrera’s penultimate paragraph noted the following “The financial industry and its political masters have to look forward, whether they like it or not.”  To end his piece Guerrera quoted an un-named banker who said “We are at a 1792 moment. Remember, the French Revolution was in 1789 but it took three years to proclaim a Republic.”

All of which brings us to HSBC. In dramatic testimony yesterday, before a Senate committee, as reported by Chris Matthews and David Bagley in a WSJ article, entitled “HSBC’s Compliance Chief to Step Down”, HSBC’s top anti-money-laundering (AML) executive announced he is stepping down for, among other reasons, “A yearlong investigation by the Senate Permanent Subcommittee on Investigations alleged HSBC’s U.S. bank became a conduit for money-launderers and potential terrorist financiers, and for the evasion of sanctions against Iran and other countries.” Additionally, a Senate report detailing the failures of HSBC found “The biggest problem was at HSBC’s Mexico branch, which moved billions of dollars of bulk cash through HSBC’s U.S. bank despite suspicions that client accounts were being used for laundering of drug cartel and other illicit funds. The Mexico bank had a committee overseeing compliance efforts, but many of its meetings were faked.” In short, there was actual knowledge that US laws were being broken and the bank was taking active steps to hide these facts. This is about as bad as it can get.

What about Bastille Day? Although the un-named banker quoted above was right, France did declare a Republic in 1792, it was only two short years until Robespierre initialed the Terror and the coming shouts of “off with their head”. In an article in the July/August issue of Foreign Affairs, entitled “Robespierre’s Rules for Radicals”, author Patrice Higonnet reviewed the recent book “Robespierre: A Revolutionary Life”. Higonnet ended the review with the following lesson from the file of Robespierre: Contrary to what they might wish, sometimes problems cannot be solved by simply cutting off someone’s head.

Banks, financial institutions and trading companies are being called to task for these deep systemic issues which have led to a corruption of ethics. As was previously noted in the FT, if bankers want to stop banker-bashing, they need to change their ethics themselves before someone else does it for them. It is clear that these institutions face a choice but only time will tell which road they take: will it mirror the road France took when it enacted an enlightened Republic or the road it took when the Terror reigned?

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2012