Failing to Prosecute Financial Fraud - On Either Side of the Atlantic - Is Extending Our Economic Crisis

George Washington's picture

Washington’s Blog

As numerous experts have pointed out for years, failing to prosecute financial fraud is extending our economic crisis.

This continues to be a key, ongoing story.

For example, the Telegraph reports today:

The
EU's financial watchdog has systemically "sabotaged" investigations
and caved into intimidation from countries including France and Italy
to cover up fraud, according to a senior official.

And Bloomberg noted on Monday:

The
U.S. Securities and Exchange Commission’s internal watchdog is
reviewing an allegation that Robert Khuzami, the agency’s top
enforcement official, gave preferential treatment to Citigroup Inc.
executives in the agency’s $75 million settlement with the firm in July.

 

Inspector
General H. David Kotz opened the probe after a request from U.S.
Senator Charles Grassley, an Iowa Republican, who forwarded an unsigned
letter making the allegation. Khuzami told his staff to soften claims
against two executives after conferring with a lawyer representing the
bank, according to the letter….

 

According to the letter, the
SEC’s staff was prepared to file fraud claims against both individuals.
Khuzami ordered his staff to drop the claims after holding a “secret
conversation, without telling the staff, with a prominent defense
lawyer who is a good friend” of his and “who was counsel for the
company, not the individuals affected,” according to a copy of the
letter reviewed by Bloomberg News.

I will keep hammering on this until people get it: The economy will not recover unless fraud is prosecuted.