By Aruna Viswanatha
WASHINGTON May 5 The U.S. Justice Department is
pursuing criminal investigations of financial institutions that
could result in action in the coming weeks and months, U.S.
Attorney General Eric Holder said in a video, adding that no
company was "too big to jail."
The comments, made in a video posted on the Justice
Department's website on Monday, came as federal prosecutors push
two banks, BNP Paribas SA and Credit Suisse AG
, to plead guilty to criminal charges to resolve
separate investigations, according to people familiar with the
While Holder did not name any banks, he said he is
personally monitoring the ongoing investigations into financial
institutions and is "resolved to seeing them through."
"I intend to reaffirm the principle that no individual or
entity that does harm to our economy is ever above the law,"
Holder said in the video. "There is no such thing as 'too big to
French bank BNP Paribas warned last week it faces fines from
U.S. authorities in excess of $1.1 billion over allegations that
it violated U.S. sanctions against Iran and other countries.
The Swiss finance minister met Holder on Friday to discuss a
U.S. probe into Swiss banks that allegedly helped Americans
evade U.S. taxes, which includes Credit Suisse.
While units of financial institutions have agreed to plead
guilty to breaking U.S. criminal laws, such agreements have
usually involved foreign subsidiaries that have little contact
with U.S. regulators.
Japanese units of UBS AG and Royal Bank of Scotland plc, for
example, pleaded guilty in the past two years to resolve
criminal charges that their traders manipulated the Libor
benchmark interest rate.
A criminal conviction of an entity regulated in the United
States could lead authorities to potentially revoke a charter or
carry out other punitive measures.
In his video, Holder said prosecutors are working closely
with regulators to address the issues before taking action.
"Rather than wall off banks from prosecution, the potential
for such severe consequences simply means that federal
prosecutors conducting these investigations must go the extra
mile to coordinate closely with the regulators that oversee
these institutions' day-to-day operations," he said.
"This cooperation will prove key in the coming weeks and
months as the Justice Department continues to pursue several
important investigations," he said.
The Justice Department has come under fire for bringing few
marquee cases against major financial institutions or their
executives in the wake of the 2007-2009 financial crisis.
In March 2013, Holder told a U.S. Senate committee that it
can "become difficult" to prosecute major financial institutions
that have been accused of wrongdoing because they are so large
that a criminal charge could pose a threat to the economy. He
quickly backtracked on those comments.
The Justice Department has pursued other criminal
investigations of financial institutions in the past few years,
but many have resulted in deferred or non-prosecution
agreements, under which a bank is not actually indicted.
Concerns about the impact of criminal prosecutions on large
companies can be traced back to the 2002 indictment and eventual
demise of accounting giant Arthur Andersen, which led to the
loss of about 25,000 jobs and greater consolidation in the
In light of that case, the Justice Department stepped up its
use of agreements that can resolve criminal allegations without
the filing of an indictment.
Decisions on how to resolve criminal probes of corporate
misconduct usually revolve around how bad and pervasive the
conduct was, and how much the company did to fix the problems
once uncovered, prosecutors and defense lawyers have said.
Lawyers for banks have expressed concern not only about the
potential regulatory fallout of a criminal conviction, but also
about how counterparties or clients might react.
Defense lawyers said it would be hard to predict whether
some clients, including public pension funds, might choose not
to do business with a convicted felon, and whether star
employees might then leave.
(Reporting by Aruna Viswanatha; Additional reporting by Julia
Edwards; Editing by Caren Bohan and Paul Simao)