SEC Commissioner Furious That SEC Has Made A Mockery Of "Recidivist Criminal Behavior" By Banks

Tyler Durden's picture

Yesterday, in the aftermath of the latest settlement by the world's biggest banks, who finally admitted they have criminally rigged virtually all markets since the Great Financial Crisis (and prior) despite promising repeatedly they would not do that after having been caught time and again and punished with ever "harsher" wristslaps, we wrote that the "Public Is Confused Why World's Biggest Banks Admitting Criminal Fraud, Leads To Public Yawns."

It appears the public is not the only one who is confused, or yawning, that yet again banks get away with just another penalty (to be paid by their shareholders) and zero jail time for the perpetrators despite what is supposedly "criminal" rigging: none other than a SEC regulator working for the same enforcer who "punished" the Too Big To Prosecute banks only to immediately grant them waivers to continue business as usual, is just as confused.

Here, two weeks after SEC commissioner Cara Stein raged that the SEC would turn a blind eye to Germany's Deutsche Bank for a "Decade Of Lying, Cheating, And Stealing", is her dissenting opinion with the SEC settlement, this time broadening her anger to include all the banks, not just the German one.

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Dissenting Statement Regarding Certain Waivers Granted by the Commission for Certain Entities Pleading Guilty to Criminal Charges Involving Manipulation of Foreign Exchange Rates

Commissioner Kara M. Stein

May 21, 2015

I dissent from the Commission’s Orders, issued on May 20, 2015, that granted the following waivers from an array of disqualifications required by federal securities regulations:

  1. UBS AG, Barclays Plc, Citigroup Inc., JPMorgan Chase & Co. (“JPMC”), and the Royal Bank of Scotland Group Plc (“RBSG”), waivers from the provisions under Commission rules that automatically make them ineligible for well-known seasoned issuer (“WKSI”) status;
  2. UBS AG, Barclays, and JPMC waivers from automatic disqualification provisions related to the safe harbor for forward-looking statements under Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934; and
  3. UBS AG and three Barclays entities waivers from the automatic Bad Actor disqualification provided under Rule 506.

The disqualifications were triggered for generally the same behavior: a criminal conspiracy to manipulate exchange rates in the foreign currency exchange spot market (“FX Spot Market”), a global market for buying and selling currencies.  Traders at these firms “entered into and engaged in a combination and conspiracy to fix, stabilize, maintain, increase or decrease the price of, and rig bids and offers for,” the euro-dollar foreign currency exchange (“FX”).  To carry out their scheme, the conspirators communicated and coordinated trading almost daily in an exclusive online chat room that the traders referred to as “The Cartel” or “The Mafia.” Additionally, salespeople and traders lied to customers in order to collect undisclosed markups in certain transactions.  This criminal behavior went on for years, unchecked and undeterred.

There are compelling reasons to reject these requests to waive the automatic disqualifications required by statute or rule.  Chief among them, however, is the recidivism of these institutions.   For example, in the face of the FX criminal action, a majority of the Commission has determined to grant Citigroup yet another WKSI waiver, its fourth since 2006.  It is worth noting that Citigroup was automatically disqualified from WKSI status between 2010 and 2013 for unrelated misconduct, meaning that it has effectively now triggered WKSI disqualifications five times in roughly nine years.  Further, through this latest round of Orders, the Commission has granted:

  • Barclays its third WKSI waiver since 2007;
  • UBS its seventh WKSI waiver since 2008;
  • JPMC its sixth WKSI waiver since 2008; and
  • RBSG its third WKSI waiver since 2013.
  • The Commission has thus granted at least 23 WKSI waivers to these five institutions in the past nine years. The number climbs higher if you include Bad Actor and other waivers.

This latest round of criminal charges also comes on the heels of the Department of Justice’s actions against UBS, Barclays, and RBSG for their collusive manipulation of the London Interbank Offered Rate (“LIBOR”), a benchmark used in financial products and transactions around the world.  The manipulation of LIBOR was flagrant and “impact[ed] financial products the world over, and erode[d] the integrity of the financial markets.” As part of the settlements in the LIBOR matters, UBS, Barclays, and RBSG each entered into agreements with the Department of Justice in which they undertook not to commit additional crimes during the term of the agreements.

Allowing these institutions to continue business as usual, after multiple and serious regulatory and criminal violations, poses risks to investors and the American public that are being ignored.  It is not sufficient to look at each waiver request in a vacuum.

And today the Commission heads further down this path.  After the LIBOR guilty pleas, UBS was granted a WKSI waiver that was explicitly conditioned on compliance with the judgment in the LIBOR-related matter.  That explicit condition has now been violated.  Yet, the Commission has just issued UBS a new WKSI waiver.  

It is troubling enough to consistently grant waivers for criminal misconduct.  It is an order of magnitude more troubling to refuse to enforce our own explicit requirements for such waivers.   This type of recidivism and repeated criminal misconduct should lead to revocations of prior waivers, not the granting of a whole new set of waivers.  We have the tools, and with the tools the responsibility, to empower those at the top of these institutions to create meaningful cultural shifts, yet we refuse to use them.

In conclusion, I am troubled by repeated instances of noncompliance at these global financial institutions, which may be indicative of a continuing culture that does not adequately support legal and ethical behavior.  Further, I am concerned that the latest series of actions has effectively rendered criminal convictions of financial institutions largely symbolic.  Firms and institutions increasingly rely on the Commission’s repeated issuance of waivers to remove the consequences of a criminal conviction, consequences that may actually positively contribute to a firm’s compliance and conduct going forward. 

* * *

Or to summarize, running a criminal cartel is expensive...

... but at least keep everyone out of prison. For, you know, crimes.

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onewayticket2's picture

We ignored some folks, err, donors.

PartysOver's picture

Perhaps the SEC Commisioner will be dining with Vince Foster and Ron Brown very soon.

Cognitive Dissonance's picture

Nah. It actually lends 'credibility' to the 'authority' when there is a dissenter amongst the co-conspirators.

NoWayJose's picture

As long as the anti-bank dissenter is firmly in the minority!

SoilMyselfRotten's picture

the latest series of actions has effectively rendered criminal convictions of financial institutions largely symbolic.


Symbolic? How about obsolete? Quaint? Non-existent?

eclectic syncretist's picture

I suppose to level the playing field and make it all fair we could eliminate incarceration and make speeding a $1 fine offense, carjacking $10 fine, ect.

Arius.'s picture

Her furiosity reminds me of another FURIOS SEC commissioner Bart Chilton ... yeah well, these are getting old...

Fun Facts's picture

Let us know when the criminal SEC bastards prosecute the people who made 4 billion dollars in UAL put options on 911 foreknowledge.

El Vaquero's picture

We have reached a time where enforcing the law will bring on a crash.  I say, bring it on.

lincolnsteffens's picture

But we do enforce the law. You know if you steal a candy bar what could happen to you, especially if you get caught 3 times!

Ms. Erable's picture

'Criminal convictions'? Funny, I don't remember seeing any banksters doing a perp walk.

Trogdor's picture

Let us know when the criminal SEC bastards prosecute the people who made 4 billion dollars in UAL put options on 911 foreknowledge.

Hey FF - you know ...... they looked into that and it was all just a lucky guess! /s/

Honestly, this SEC Zionist bitch's rant is so hollow it's sickening to read.  It will NEVER F*&^ING CHANGE because the SEC and Feds rake in $billions right along side the "criminals" - they're co-conspirators - and she's either a complete moron, or, is trying to "lend credibility" to one of the most corrupt regulatory agencies on the planet by lying her ass off in front of the goy - trying to act like she's not a black-rotten to the core POS.  Frankly, I hope she gets pancreatic cancer and digests herself from the inside out.

mtl4's picture

I think we should just have pro wrestlers appointed to be head of the SEC, then at least we could at least be entertained by all the idiot Bart Chilton look alikes.

teslaberry's picture

i agree. if she isn't publicly calling for the imprisonment of barrack obama himself . IN PUBLIC. 

she is part of this vast conspiracy. i don't need to read her bio to know she is almost certainly a revolving door piece of shit paid to drink cognac and smoke cigars behind closed doors.

Freddie's picture

Dual Shit-i-Zen - get out of nail gun murder for free card.

scrappy's picture
Brooksley Born, Kara Stein, your table is ready. (In Heaven)

Seriously, when will this shit cycle ever end?  When it does.

VinceFostersGhost's picture



So we paided the fine.


What the hell are you guys bitching about?


Here. we'll pay another one, go away.

johnnymustardseed's picture

Stealing more that $500 is considered a felony, unless you are a bank. Where is Occupy Wall Street? 

swmnguy's picture

"Occupy Wall Street?"  I heard, from the White House, the FBI, local cops and Wall Street corporate security, that they were a bunch of dirty hippies who deserved to be beaten, teargassed, and held without charges.  So whatever they were protesting against, I'm for.

Crash Overide's picture

Aren't the Soros kids in Ukraine trying to get WWIII kicked off?

swmnguy's picture

You touch on an extremely important point, which I find to be rarely acknowledged or even noticed.

The Elites share a single common purpose.  Power.  That's it.  They have rivalries amongst themselves over power, but that's mostly invisible to those of us who are not Elite (which is almost all of us).  Sometimes the interests of certain Elites seems to be beneficial to us, and sometimes not.  When we oppose them, we outnumber them vastly, so they have to counter opposition by various means.  Outright open confrontation is very risky to the elites, and usually goes badly for them (The French Revolution).  So they avoid that  at all costs.  They use proxies when they have to, like hired armies etc.  More commonly, they co-opt us to do what they want us to do, under the impression that it's in aid of our own best interests.  In fact, this is so common very few people ever notice.

Not that there's any real difference between the two parties, but why on Earth would anyone living in a trailer park in Arkansas vote Republican?  Who has abortions?  Who gets various forms of welfare?  Who pays negative income taxes already?  Who can't afford to go to the doctor?  Who deals with raging meth addiction, alcoholism, etc.?  Who has more broken families?  Who can't afford education?  Who can't get a job that can support a family?  Who really, really, doesn't need to be lectured about morality?

Now, I'm not saying the Democrats offer actual solutions to these issues; they most emphatically do not.  But why do these people support a party that is openly antagonistic to their interests?  Because they've been co-opted.  Military service is very common among the rural poor.  They went through hell, and were discarded like used Kleenex.  So  when a group of Elites tell them they "Honor their Service," they think, "Finally!" and support that group.  They tend to be devoutly religious, if not very observant in reality, as Chrisitianity is at heart a philosophy of life for the downtrodden.  So if a group of Elites praises their beliefs and tells them their beliefs are under attack and only this one group of Elites wants to help them, they are very loyal.

It works the same for everybody else.  Urban professionals feel that American culture is crass and doesn't like them.  They're right.  American culture has always been very anti-intellectual.  So the Democrats tell them the things they want to hear.  Some of us don't approve morally of what Capitalism requires, or the pursuit of Empire.  There are groups of Elites who tell us they are dedicated to making those things better.

You think George Soros believes anything? I don't.  Look at the god damned guy.  If the stories of his childhood are true, he comes by his utter nihilism and vacancy of spirit honestly, at least.  But that doesn't make him any less of a monster.  He cares about one thing and one thing only; power.  He supported "Occupy" and the other things he supports to gain supporters to help him to increase his personal leverage against other members of the Elite whose power he wants to take for himself.  That's it.

So yes, people who support George Soros are in Ukraine trying to start WWIII.  Because they've been co-opted and have deluded themselves into believing that their Elite Lord, in a feudal sense, will reward their loyalty.  In the same way that Tea Party types despised the Occupy people because they were loyal to rival Elites; without noticing that they were protesting against the very same things.  The Elites were able to resurrect the "Dirty Hippies" meme from the 1960s and 1970s, when those who became the Tea Party were in the military, and those who became Occupy were protesting against the war.  That was when the "spitting on returning troops" libel was implemented, when the only time that is documented to have happened was at the 1972 GOP Convention in Miami, when veterans opposed to the war were spat upon by College Republicans supporting Nixon's re-election.

Co-opted.  I see it all the time; I work (self-employed) for a variety of Fortune 500 companies.  Every day, I deal with corporate employees loyally and happily helping their Elites exploit them and drain them of life.  When they become dissatisfied, they don't understand why.  They go on and on about their fear of being fired at any momnet, their monstrous boss, the demeaning things they have to do every day, their low pay and lack of prospects, etc.  Occasionally I'll suggest to a particularly bright one that they go into business for themselves, doing the exact same thing they do now, but on their own inititative.  When I took that step, all the angst just vanished, almost overnight.  Almost every single time, I get the response, "Oh, I could never do what you have done.  I need the SECURITY!"  Then they take some more Prilosec and maybe a Xanax and it numbs them up enough to carry on.

So, long rant short, yes; the Soros kids are in Ukraine, loyally and happily destroying themselves and sabotaging their own interests, in the vain hope their loyalty will be somehow rewarded.


booboo's picture

*yawn* Don't get too worked up, the system has been blinded by greed and the bankers cannot see that they are being played as well. They play an important role in that they will be used as the relief valve for much of the coming wrath in the game of societal upheaval that will give birth to american communism. Lopping off their heads may scratch the itch but will do little to stop the march towards a totalitarian regime, it will just be another misdirection by those molding you into a dutiful little serf turning in your neighbor for having too many chickens.


imapopulistnow's picture

Good observation.  Got to have someone to blame for the next crash.  The pols are just keeping their power dry.

BlowsAgainsttheEmpire's picture

Yeah, she needs to be careful.  The Congressional whores will be all over her.


“In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

~ Rep. Spencer Bachus (R-AL)

"And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."

~ Sen. Dick Durbin (D-Ill.) 

Navymugsy's picture

As long as the banks are allowed to keep up the "pay to play" shennanigans the SEC's howling is a moot point.

pods's picture

I love it when you talk dirty baby 

-the banks 

AIIB's picture
AIIB (not verified) May 22, 2015 7:06 AM

Kara M. Stein...


So, is she saying she's gonna cut down the mightiest tree in the forest with... A HERRING? (or some other kind of fish)?

Sophist Economicus's picture

No. Kara Stein is the classic duplicitous government creature that plays for her 'sides' puppet masters. She conveniently overlooks the fraud in her own department, the fraud of everyone in the congress, senate and White House, the fact the FX was manipulated during the crisis as policy, that bonds are bought by primary dealers to keep the government ponzi alive, and that without the FED and the banks playing the role of 'private sector' buyers of fannie, Freddie, muni, etc. etc. etc. -- her government wet dream would come crashing down

AIIB's picture

Never expect someone to tell the truth when their paycheck is predicated on telling lies...

ejmoosa's picture

Yeah, she's furious.  And she'll be furious all the way to the bank....

Budnacho's picture

I sincerely wonder if these idiots believe the fines they paid will protect them in any way when this shit all falls apart. I forsee a future of Guillotines and Drumhead Justice.....

Ace Ventura's picture

Wonder which TBTJ / TBTF financial institution Ms. Stein will be working for when she 'moves on from gubbermint service'?

AIIB's picture

TJ2F = Too Joo 2 Fail

two hoots's picture

I'd like to think that was a sincere argument but suspect it was the SEC's way of saying 'we must say or do something so the public is appeased, again' 

Mary White is a  proven charade.

overmedicatedundersexed's picture

she is to be congradulated for pointing out the obvious ,so obvious in fact that no DA -SEC court Judge or state - fed AG even takes any interest at all ..the lawyers are like fish swimming in a lake of corruption not knowing they are in it as it is the very air they all survive on or to put it bluntly: they are paid not to notice.

11b40's picture

Of course, you are right, even if you are overmedicated, and that condition is certainly understandable!

Just this week, we had had this legal settlement with it's 'in your face' F.U. to the public from the so-called regulators who are supposed to be protecting us, the Trans Pacific Partnership fast track was passed against the wishes of the public - another big F.U., and it looks like more money for the defense department to send more weapons to the ME, where the public again wants us to GTFO.

We can only hope that the compound effect of the continuing realizations that our government is working against us will finally sink in to enough heads that we will start to demand changes.  These crimes are becoming more frequent and more blatant, and eventually a critical mass of the public just might reach the boiling point.  The evidence is all around, but there needs to be some kind of major spark to get the public focused.  I don't know what it will take, but certainly not something like FX trading or LIBOR, which not one person in 50 even understands.


buzzsaw99's picture

go blow a banker stein

Max Cynical's picture

Give her some credit.

Not only will she probably be fired but her job prospects on Wall Street just vaporized.

shovelhead's picture

I see a bright nailgun in her future.

Niall Of The Nine Hostages's picture

Adorable. So when is she planning to resign and go on RT to tell the truth about how Western banks are above the law to anybody willing to listen?

Thought not. 

Bazza McKenzie's picture

Seems to me she has just told the truth in a public statement.  What good will resigning do?  That would mean one less person on the inside to speak out (and there are damn few of them).

Clarabell's picture

This is like robbing a liquor store for $1000.00 and then when caught, paying a $50.00 fine! Crime pays for the big guys.

Seasmoke's picture

And then reselling the liquor , which you never had a right to in the first place. 

Urban Redneck's picture

Yes, but because there is a different paradigm involved- Mutually Assured Destruction.

If you knock over a liquor store, you better have some very crooked friends in Langley (or dirt on local elected officials) before sitting down with the D.A.

Seasmoke's picture

You Fucking Think ????

Bazinga's picture

She'll talk the talk but will she walk it? Remember Bart Chilton? He did the talk and walked right into a cushy post-CFTC job. Kara will do the same lest she meet the nailgun shovelhead mentioned above...

overmedicatedundersexed's picture

I am sure the next elected president will take action on this...LOL any bets a question on this issue of TBTF law breaking will never even be addressed by press or candidates in any western country.

Freewheelin Franklin's picture

When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed. 



~ Ayn Rand