On Tuesday, December 6th, President Obama gave a speech in Osawatomie, Kansas that covered several
topics, including the topic of instituting stiffer penalties for those
who commit securities fraud.
Some references were made to the proposed $285 billion settlement with
Citigroup over alleged fraud related to collateralized debt obligations.
If the alleged fraud played out as described, investors would have lost
over $700 million, and Citigroup would have profited by $160 million.
US District Court Judge Jed Rakoff had commented at the time that “If
the allegations of the complaint are true, this is a very good deal for
Citigroup; and, even if they are untrue, it is a mild and modest cost
of doing business.”
In Tuesday's speech, Obama stated it was time for this to change:
"Too often, we’ve seen Wall Street firms violating major anti-fraud
laws because the penalties are too weak and there’s no price for
being a repeat offender. No more. I’ll be calling for legislation
that makes these penalties count – so that firms don’t see
punishment for breaking the law as just the price of doing business.”
Theinvestment fraud lawyers with Meyer Wilson are interested to see how any changes to investment
fraud penalties play out, and we hope to see stronger penalties in the
future for those who would take advantage of vulnerable investors.