Here is great discussion by Mike “Mish” Shedlockon at SitkaPacific Capital Management on the recent plea entered into the court by BNP.
French bank BNP Paribas plead guilty Monday to criminal money-laundering laws by helping clients dodge sanctions on Iran, Sudan and other countries.
As part of the settlement, BNP will pay a record penalty of close to $9 billion.
Former ECB president Jean-Claude Trichet said the fine was neither fair, just, nor proportionate and carries risks for the global financial system.
CCN Money has the synopsis in BNP Paribas to Pay Nearly $9 Billion Penalty.
On Monday in an agreement with the Manhattan District Attorney Cyrus Vance the bank pleaded guilty to falsifying business records and conspiracy in Manhattan Supreme Court. On Tuesday it is expected to plead guilty for violating money laundering laws in federal court with U.S. Attorney Preet Bharara.
The bank also agreed to a sanction by the New York department of financial services. It will suspend certain U.S. dollar clearing transaction services through its New York branch for one year.
About 30 employees will leave BNP Paribas as a result of the investigation, including several who have gone already, according to the U.S. official.
The fine dwarfs HSBC (HSBC)’s $1.9 billion penalty in 2012 for similar offenses, and the $2.6 billion Credit Suisse (CS) paid in May to settle tax evasion claims.
The Wall Street Journal said BNP Paribas would have to slash its dividend and raise billions of euros by issuing bonds.
Standard and Poor’s has warned it could cut the bank’s long term credit rating once it reviewed the size of the fine and the nature of any additional penalties.
Curious Thing
Curiously, no one goes to prison for money laundering, falsifying business records, or conspiracy charges.
But New York Times Deal Book reports Prosecutors Ask at Least 8 Years for Martoma in Insider Trading Case.
Federal prosecutors are recommending that Mathew Martoma, a former trader who worked for the billionaire investor Steven A. Cohen, be sentenced next month to at least eight years in prison for insider trading, if not significantly more.
That would be at the upper end of prison sentences for hedge fund traders convicted of insider trading in recent years, but by no means the stiffest punishment handed down during the long-running investigation.
In February, a federal jury in Manhattan convicted the former SAC portfolio manager of helping the hedge fund generate profits and avoid losses totaling $275 million in 2008.
To date, the 11 years given to Raj Rajaratnam, the co-founder of the Galleon Group hedge fund, is the longest sentence anyone in the investigation has received. Mr. Rajaratnam was convicted by a jury in May 2011 on 14 counts of insider trading — more than Mr. Martoma’s three criminal charges. But the illicit trading by Mr. Rajartnam generated about $63 million, compared with the $275 million in illegal profits and avoided losses for Mr. Martoma.
Questions of the Day
Rajartnam was sentenced to prison for 11 years based on illicit profits of $63 million.
Here’s the question of the day: Did BNP Paribas make more than $63 million in money laundering and other conspiracies?
Bonus question: Is insider trading worse than falsifying records?
Answer: Apparently, insider trading is worse than money laundering, falsifying business records, and various other conspiracies. Martha Stewart knows this as well, via obstruction of justice charges related to insider trading.
Addendum:
The CATO institute has the absurd details in Martha Stewart in Prison?
Meanwhile, insider trading by Congress is perfectly legal, even when Congressmen know who a big defense contract will be awarded to (and act on it in advance).
By “Punishing” France, The US Just Accelerated The Demise Of The Dollar
Not even we anticipated this particular “unintended consequence” as a result of the US multi-billion dollar fine on BNP (which France took very much to heart). Moments ago, in a lengthy interview given to French magazine Investir, none other than the governor of the French National Bank Christian Noyer and member of the ECB’s governing board, said this stunner at the very end, via Bloomberg:
NOYER: BNP CASE WILL ENCOURAGE ‘DIVERSIFICATION’ FROM DOLLAR
Here is the full google translated segment:
Q. Doesn’t the role of the dollar as an international currency create systemic risk?
Noyer: Beyond [the BNP] case, increased legal risks from the application of U.S. rules to all dollar transactions around the world will encourage a diversification from the dollar. BNP Paribas was the occasion for many observers to remember that there has been a number of sanctions and that there would certainly be others in the future. A movement to diversify the currencies used in international trade is inevitable. Trade between Europe and China does not need to use the dollar and may be read and fully paid in euros or renminbi. Walking towards a multipolar world is the natural monetary policy, since there are several major economic and monetary powerful ensembles. China has decided to develop the renminbi as a settlement currency. The Bank of France was behind the popular ECB-PBOC swap and we have just concluded a memorandum on the creation of a system of offshore renminbi clearing in Paris. We have very strong cooperation with the PBOC in this field. But these changes take time. We must not forget that it took decades after the United States became the world’s largest economy for the dollar to replace the British pound as the first international currency. But the phenomenon of U.S. rules expanding to all USD-denominated transactions around the world can have an accelerating effect.
In other words, the head of the French central bank, and ECB member, Christian Noyer, just issued a direct threat to the world’s reserve currency (for now), the US Dollar.
Putting this whole episode in context: in an attempt to punish France for proceeding with the delivery of the Mistral amphibious warship to Russia, the US “punishes” BNP with a failed attempt at blackmail (recall that as Putin revealed, the BNP penalty was a used as a carrot to disincenticize France from concluding the Mistral transaction: had Hollande scrapped the deal, BNP would likely be slammed with a far lower fine, if any). Said blackmail attempt backfires horribly when as a result, the head of the French central bank makes it clear that not only is the US Dollar’s reserve currency status not sacrosanct, but “the world” will now actively seek to avoid USD-transactions in order to escape the tentacle of global “pax Americana.”
And, the biggest irony of all is that in “punishing” France for dealing with Russia, that core country of the Eurasian alliance of Russia and China, the US merely accelerated the gravitation of France (and all of Europe) precisely toward Eurasia, toward a multi-polar (sorry fanatic believers in a one world SDR-based currency) and away from the greenback.
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