Skip to Content

New York Official Bringing Fraud Cases Against Banks


A New York attorney general announced on Jan. 15 that he planned to bring fraud cases against large banks that were accused of selling securities that were mortgage-backed prior to the United States’ 2008 financial crisis. Some of the targeted banks include Bank of America Corporation, Citigroup Inc. and JP Morgan Chase & Co.

In December, a justice for the Supreme Court rejected a bid from Credit Suisse Group AG, a Swiss bank, to have their securities fraud case dismissed. The bank was reportedly responsible for causing $11.2 billion in losses after deceiving investors regarding the safety of their mortgage-backed securities. According to the attorney general, this dismissal affirmed the ability of the official to pursue fraud accusations against major banks under the Martin Act. It was noted that the next bank facing a case was Morgan Stanley, though it was unknown if the attorney general was working towards a settlement with this bank.

A third case that had been filed against Barclays PLC, a British Bank, in June was also underway. This bank was accused of providing their high-frequency traders with unfair advantages in an alternative trading system. The bank also filed a motion for dismissal, though the Supreme Court justice had not ruled on the motion when the report was released. She did note, however, that the complaint was confusing.

When an individual or a company is accused of being involved in white collar crimes, there are serious penalties that the person or group may face. A criminal law attorney may work out a defense that results in the dismissal of the case or results in an acquittal if the evidence against their client is weak. Otherwise, the attorney may negotiate a settlement that does not diminish the person’s reputation and reduces any penalties that they may be facing, such as a jail sentence and massive fines.

Source: Reuters, “More banks targeted for mortgage securities fraud: NY attorney general”, Karen Freifeld, Jan. 15, 2015