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Monday, June 30, 2014 7:30 PM


French Bank BNP Paribas Pleads Guilty Criminal Conspiracy Charges, Fined Record $9 Billion; Anyone Headed to Prison?


Today, French bank BNP Paribas plead guilty Monday to criminal money-laundering laws by helping clients dodge sanctions on Iran, Sudan and other countries.

As part of the settlement, BNP will pay a record penalty of close to $9 billion.

Former ECB president Jean-Claude Trichet said the fine was neither fair, just, nor proportionate and carries risks for the global financial system.

CCN Money has the synopsis in BNP Paribas to Pay Nearly $9 Billion Penalty.

On Monday in an agreement with the Manhattan District Attorney Cyrus Vance the bank pleaded guilty to falsifying business records and conspiracy in Manhattan Supreme Court. On Tuesday it is expected to plead guilty for violating money laundering laws in federal court with U.S. Attorney Preet Bharara.

The bank also agreed to a sanction by the New York department of financial services. It will suspend certain U.S. dollar clearing transaction services through its New York branch for one year.

About 30 employees will leave BNP Paribas as a result of the investigation, including several who have gone already, according to the U.S. official. 

The fine dwarfs HSBC (HSBC)'s $1.9 billion penalty in 2012 for similar offenses, and the $2.6 billion Credit Suisse (CS) paid in May to settle tax evasion claims.

The Wall Street Journal said BNP Paribas would have to slash its dividend and raise billions of euros by issuing bonds.

Standard and Poor's has warned it could cut the bank's long term credit rating once it reviewed the size of the fine and the nature of any additional penalties.
Curious Thing

Curiously, no one goes to prison for money laundering, falsifying business records, or conspiracy charges.

But New York Times Deal Book reports Prosecutors Ask at Least 8 Years for Martoma in Insider Trading Case.
Federal prosecutors are recommending that Mathew Martoma, a former trader who worked for the billionaire investor Steven A. Cohen, be sentenced next month to at least eight years in prison for insider trading, if not significantly more.

That would be at the upper end of prison sentences for hedge fund traders convicted of insider trading in recent years, but by no means the stiffest punishment handed down during the long-running investigation.

In February, a federal jury in Manhattan convicted the former SAC portfolio manager of helping the hedge fund generate profits and avoid losses totaling $275 million in 2008.

To date, the 11 years given to Raj Rajaratnam, the co-founder of the Galleon Group hedge fund, is the longest sentence anyone in the investigation has received. Mr. Rajaratnam was convicted by a jury in May 2011 on 14 counts of insider trading — more than Mr. Martoma’s three criminal charges. But the illicit trading by Mr. Rajartnam generated about $63 million, compared with the $275 million in illegal profits and avoided losses for Mr. Martoma.
Questions of the Day

Rajartnam was sentenced to prison for 11 years based on illicit profits of $63 million.

Here's the question of the day: Did BNP Paribas make more than $63 million in money laundering and other conspiracies?

Bonus question: Is insider trading worse than falsifying records?

Answer: Apparently, insider trading is worse than money laundering, falsifying business records, and various other conspiracies. Martha Stewart knows this as well, via obstruction of justice charges related to insider trading.

Addendum:

The CATO institute has the absurd details in Martha Stewart in Prison?

Meanwhile, insider trading by Congress is perfectly legal, even when Congressmen know who a big defense contract will be awarded to (and act on it in advance).

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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