* Holder: Fines not enough in corporate fraud cases
* Action against individuals expected in coming months
* 16 subpoenas issued in RMBS investigation
By Aruna Viswanatha
WASHINGTON, March 6 The U.S. Justice
Department plans to take action in the coming months against
individuals involved in corporate fraud, Attorney General Eric
Holder said on Tuesday, adding that fines against companies are
not enough of a deterrent.
"We're gonna make some news with regard to holding
individuals responsible for things we tend to think of as
corporate crimes," Holder said at a meeting of state attorneys
general in Washington.
The comments came in response to a question from Virginia
Attorney General Ken Cuccinelli about individual prosecutions in
Medicare fraud cases, but Holder said the remarks applied "more
generally" to corporate fraud.
In the corporate fraud area, the Justice Department has
received especially sharp criticism for not bringing more cases
against entities and individuals who played a role in the
2007-2009 financial crisis.
Federal judges in recent months have also criticized other
enforcement agencies for bringing cases against corporations
while limiting any action against individual employees who may
have been responsible for the conduct.
In the most notable example, U.S. District Judge Jed Rakoff
in November threw out Citigroup's proposed $285 million
settlement with the U.S. Securities and Exchange Commission over
the sale of toxic mortgage debt, and called the fine "pocket
change" for the company.
Holder echoed that sentiment on Tuesday and said:
"Especially when you look at the securities field, there have
been far too many repeat offenders."
"It can't simply be that you make billions of dollars and
then you pay hundreds of millions of dollars in penalties.
That's not a disincentive," he said.
The remarks come as a new federal-state working group gets
under way to investigate the pooling and sale of home loans that
contributed to the financial crisis.
The group, which President Barack Obama announced during his
State of the Union address in January, has held meetings and is
moving forward with its investigations, Holder said.
The department has sent 16 civil subpoenas in its
investigation, Holder said, five more than had been revealed
during a January press conference.
Reuters reported last week those subpoenas appeared to
overlap with previous investigations undertaken by the SEC,
suggesting that the Justice Department was treading on cases the
SEC has struggled to bring for years.
A Justice Department spokeswoman said last week the working
group is "marshaling parallel efforts" and "pooling resources"
to investigate those responsible for misconduct.