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Bank fines top $142 billion — but tobacco fines are still bigger September 11, 2014

Filed under: Uncategorized — larsfforsberg @ 2:47 pm
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BY: Sital S. Patel

August 20, 2014

The world’s biggest banks have now paid more than $142 billion in fines for wrongdoing tied to the financial crisis. That’s a huge number — but it pales compared to what tobacco companies have paid for their transgressions.

The top five U.S tobacco companies paid a combined $246 billion to settle with 46 states, five U.S. territories and the District of Columbia in 1998. The states had successfully argued that tobacco companies should cover the exorbitant cost of  treatment for health issues related to smoking.

For both industries, the settlements also led to heavy regulation and other significant changes to how companies do business.

For banks, the Dodd-Frank Act, which was passed by Congress in 2010, forced them to scale back risk and increase the amount of capital held in reserve. The Federal Reserve also required the biggest banks to undergo “stress tests” that showed whether they could survive another crisis without taxpayer-funded bailouts.

For their part, the tobacco industry agreed to accept federal regulations, which included advertising bans and a halt to marketing that targets the young.

The following are some of the biggest fines that banks have paid:

Bank of America Corp. BAC has paid a staggering $74.65 billion in fines and tops our table. The bank announced a record settlement of $16.65 billion with the Justice Department on Thursday for charges stemming from its purchase of mortgage lender Countrywide in 2007 and Merrill Lynch. This is the largest-ever government settlement with a single U.S. company.

J.P. Morgan Chase & Co. JPM has paid about $27 billion of fines. In November, the bank agreed what was at the time a record $13 billion settlement of charges also related to mortgages.

Citigroup Inc. C has paid about $12.14 billion in fines.  The latest came in July, when the bank said it would pay $7 billion to the Justice Department, several state attorneys general and the FDIC, over mortgage-related charges.

On Wednesday, Standard Chartered Plc  UK:STAN said it will pay a $300 million penalty for lapses in its money-laundering procedures, its second such penalty after a $340 million fine levied in 2012.

By comparison, the five largest tobacco makers, Philip Morris PM , R.J. Reynolds (now renamed Reynolds American Inc. ra RAI , Brown & Williamson, Lorillard LO and Liggett & Meyers made thebiggest litigation settlement to date in corporate America.

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UBS near a deal over Libor rigging December 5, 2012

Filed under: Corporate Malfeasance,Economics,Investing Globally — larsfforsberg @ 3:16 am
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Swiss bank UBS AG is reportedly close to settling an investigation by US and British authorities over alleged Libor rate manipulation and could pay a more than $450 million fine.

Currently the bank is in discussions with the Commodity Futures Trading Commission, the US Justice Department and Britain’s Financial Services Authority over the issue, the New York Times reported citing officials close to the matter. If the parties agree to strike a deal, it would result in the largest fines related to the rate-rigging scandal.

Libor is a key bank lending rate which affects different financial instruments and transactions worth more than $300 trillion worldwide.
Earlier this year British bank Barclays became the first financial institution to pay a fine of about $450mn over the Libor case. The scandal over rate manipulation led to the resignation of Barclays’ CEO Bob Diamond, Chairman Marcus Agius, and COO, Jerry de Missier.

Regulators and prosecutors in the US, Britain, Canada and Japan have been probing the major banks such as Royal Bank of Scotland, HSBC, JP Morgan Chase, Deutsche Bank and Citigroup over possible manipulation of Libor between 2005 and 2009.

Currently UBS is involved in a number of investigations and faces even more fines elsewhere. German prosecutors have launched an investigation into claims the Swiss bank’s German subsidiary helped customers evade local taxes by transferring money out of the country. In 2009, the bank struck a deal with US regulators to pay $780mn over alleged involvement in tax evasion and released the names of thousands of American clients suspected of tax fraud.

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