The recently-confirmed Chairwoman of the Securities and Exchange Commission, Mary Jo White, recently confirmed that defendants in some cases would no longer be allowed to neither admit nor deny any wrongdoing. This has been the on-going saga in many instances, where large Financial Firms would settle cases, the shareholders would pay the fines and the guilty parties did not suffer at all–other than the “inconvenience”.
The linked article, from the NY Times, outlines this change of approach by the Government, http://www.nytimes.com/2013/06/22/business/secs-new-chief-promises-tougher-line-on-cases.html?ref=economy&pagewanted=print. I certainly applaud this about-face on the part of the SEC.
Senator Elizabeth Warren (D-MA), a former Professor at the Harvard Law School and the driving force behind the creation of the Consumer Financial Protection Bureau, was perhaps one of the most vocal critics of “no guilt, no wrongdoing” pleas. She seemed perplexed that literally every regulator, appearing at Senate Finance Committee Hearings, stated that they had not brought any banks to Trial.
If the perpetrators know that they will not suffer the consequences of their crimes or wrongdoing, where was the deterrent? The regulators claimed that it was more cost-efficient to merely have a settlement. But, when you consider the repetitive nature of the offenses–especially among the very largest banks–the corrupt or illegal practices merely continued.