Maria T. Vullo (Photo courtesy of the author)
The much-anticipated jury verdict,[1] convicting former FTX CEO Sam Bankman-Fried (SBF) of seven felonies, after less than five hours of deliberations, demonstrates the strength of the prosecution’s case and that juries have no patience for financial fraud. While many reports correctly note that fraud is at the core of the FTX/SBF case, the verdict also sends a clear message that regulatory arbitrage should not be tolerated.
Photo courtesy of the author
Within the past year, federal law enforcement and regulatory agencies have repeatedly signaled that recidivist violations of law by corporate entities are likely to result in substantial penalties. Those signals include recidivism-specific policy statements, such as the Justice Department’s revision of its Corporate Enforcement Policy[1] to reflect its “more holistic approach to corporate recidivism”[2] and the Office of the Comptroller of the Currency’s (OCC’s) recent revisions of its Policies and Procedures Manual to address banks’ failure to correct persistent weaknesses.[3]
But those signals also include specific enforcement actions that carried substantial financial penalties, such as the Justice Department’s $315 million criminal penalty against ABB[4] and $206.7 million criminal penalty against Ericsson[5], and the Consumer Financial Protection Bureau/OCC $250 million enforcement actions against Bank of America for illegal activity in its consumer business.[6]
by Margaret E. Tahyar and Ledina Gocaj
Left to right: Margaret E. Tahyar and Ledina Gocaj (Photos courtesy of Davis Polk & Wardwell LLP)
On June 6, 2023, the Federal Reserve, FDIC and OCC (the Agencies) released final interagency guidance on banking organizations’ management of risks associated with third-party relationships. Davis Polk’s memo on the guidance is linked here. Our key takeaways:
by Michael Held, Tiffany J. Smith, Franca Harris Gutierrez, Cory C. Hansen, and Andy V. Reynolds
(photos courtesy of WilmerHale) From left to right: Michael Held, Tiffany J. Smith, Franca Harris Gutierrez, Cory C. Hansen, and Andy V. Reynolds
A flurry of activity on January 27 signaled continued skepticism from the Federal Reserve of crypto-asset-related activities generally and open, public or decentralized networks in particular.