When it comes to financial fraud law, a great deal of interest typically is focused on what the federal government does. But the Financial Fraud Law Blog and the authors of articles in the Financial Fraud Law Report also recognize the importance of state prosecutors and regulators in this area. Indeed, it is in the nature of our federal system for the states to play an important role in a host of issues. That includes financial fraud.
And, indeed, state authorities are busy.
For example, right before New Year’s Eve, Massachusetts Attorney General Martha Coakley reached a $17.3 million settlement with Countrywide Securities Corporation following the review by her office of residential mortgage securitization practices in Massachusetts.
Consider, too, that the official Web site of Minnesota Attorney General Lori Swanson has a section devoted to more than two dozen scams; that California Attorney General Kamala Harris and her office recently California shut down “fraudulent” Web sites imitating California’s health insurance marketplace; and that New Jersey has just sued Credit Suisse over the sale of more than $10 billion in mortgage backed securities, alleging that Credit Suisse Securities (USA) LLC and two of its affiliates offered the securities for sale while misrepresenting the risks.
In addition, of course, many state prosecutors also work hand-in-hand with the federal government, including especially the Financial Fraud Enforcement Task Force (remember the $13 billion mortgage-backed securities settlement that JPMorgan Chase reached with federal and state prosecutors).
The essence of state prosecutors’ involvement in the battle against financial fraud may be no better illustrated than in New York. The power of the New York State Attorney General began to be exercised to quite an extent several years ago when Eliot Spitzer was Attorney General (yes, that Eliot Spitzer), and to an even greater extent when Andrew M. Cuomo was elected to that role – before he became Governor of New York. It has accelerated to unprecedented heights in the person of Eric T. Schneiderman. And the power of the states in the financial fraud arena is compounded in New York by the actions of New York Department of Financial Services Superintendent Benjamin M. Lawsky, himself a significant adversary to financial fraudsters.
In recent weeks, for instance, New York Attorney General Schneiderman reached a $7.7. million settlement with Pearson Charitable Foundation over charges that it misused assets to benefit its for-profit affiliate and warned about the risks of medical credit cards. He continues to immerse himself in litigation involving the Madoff Ponzi scheme and was out front in the $2 billion Ocwen Financial settlement. Meanwhile Superintendent Lawsky played a key role in reaching a settlement with Royal Bank of Scotland that resulted in its payment of $100 million for violating Iran and Sudan sanctions and continues to investigate online payday lending.
For all of these reasons, #4 in Financial Fraud Law for the year is:
#4. The Rise of State Prosecutors in the Fight against Financial Fraud.
To summarize, here is the Top 10 in Financial Fraud Law so far:
- The ‘B’ Word is #5 in Financial Fraud Law for the Year
- Still Relevant Five Years Later, He Is #6 in Financial Fraud Law for the Year
- ‘Maybe Just Whistle’: #7 in Financial Fraud Law for the Year
- A Clue About #8 in Financial Fraud Law for the Year: Look at Bryan Cave’s Next Firm-Wide Leader
- #9 in Financial Fraud Law for The Year Is…
- #10 in Financial Fraud Law for the Year Is….
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