President Obama Addresses Securities Fraud and Penalties
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.