Settlements for 3 Wall Street Banks Hold a Silver Lining
- 6 years ago
Settlements for 3 Wall Street Banks Hold a Silver Lining
But while the commission and Justice Department trumpeted their crackdown on market manipulation, the settlements included language
that gave all three banks an automatic waiver from the bad actor rule — drawing sharp criticism from one Securities and Exchange commissioner, a Democrat.
It simply meant they had to apply to the Securities and Exchange Commission for the waivers — which were always granted.
That provision, known as the bad actor rule, was created to make legal settlements with regulators riskier
and more financially painful for banks — an incentive for them to avoid the conduct that precipitates such settlements.
Otherwise, she said, the banks would have wanted to apply for waivers from the
bad actor rule before finalizing and announcing the settlement agreements.
The Securities and Exchange Commission oversees the sale of securities like stocks and bonds.
But while the commission and Justice Department trumpeted their crackdown on market manipulation, the settlements included language
that gave all three banks an automatic waiver from the bad actor rule — drawing sharp criticism from one Securities and Exchange commissioner, a Democrat.
It simply meant they had to apply to the Securities and Exchange Commission for the waivers — which were always granted.
That provision, known as the bad actor rule, was created to make legal settlements with regulators riskier
and more financially painful for banks — an incentive for them to avoid the conduct that precipitates such settlements.
Otherwise, she said, the banks would have wanted to apply for waivers from the
bad actor rule before finalizing and announcing the settlement agreements.
The Securities and Exchange Commission oversees the sale of securities like stocks and bonds.