Responding to Comprehensive Financial Fraud Enforcement Efforts

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When the President of the United States highlights an enforcement initiative in the State of the Union Address, as he did on January 24, 2012, it likely is a strong indication of things to come. And action was swift. Later that week, on January 27, 2012, Attorney General Eric Holder, SEC Director of Enforcement Robert Khuzami, New York Attorney General Eric Schneiderman and a host of others introduced the new Residential Mortgage-Backed Securities Working Group (RMBS Working Group), a component of the current Financial Fraud Enforcement Task Force (Task Force). With New York Attorney General Eric Schneiderman at the helm, the RMBS Working Group has already issued subpoenas to 11 financial institutions to investigate wrongdoing in the packaging, selling, and valuing of residential mortgage-backed securities (RMBS), and the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have already brought related charges against four former traders at a major investment bank. And more is expected to come.

The President’s announcement is the latest development in the government’s enforcement response to the financial crisis. Over the last two years, President Obama’s Task Force – led by the DOJ – has facilitated an increase in the investigation and prosecution of financial crimes and other related violations. The President established the interagency Financial Fraud Enforcement Task Force by Executive Order 13519 on November 17, 2009. This group consists of dozens of federal government agencies, the National Association of Attorneys General, and the National District Attorneys Association, and it is growing.

The Task Force’s primary mission is to provide advice to the Attorney General for the enforcement of cases of bank, mortgage, loan, and lending fraud; securities and commodities fraud; retirement plan fraud; mail and wire fraud; tax crimes; money laundering; False Claims Act violations; unfair competition; discrimination; and other financial crimes and violations. To achieve this objective, the Task Force formed five working groups focusing on specific areas of fraud...

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Published In: Administrative Agency Updates, Criminal Law Updates, Electronic Discovery Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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