April 14, 2015
Public Citizen Criticizes Labor Department’s Sanction Waiver for Admitted Criminal Firm BNP Paribas
Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen’s Congress Watch Division
Note: This week, the U.S. Department of Labor (DOL) is expected to grant a waiver from automatic sanctions that apply to BNP Paribas following its criminal guilty plea with the U.S. Department of Justice over international sanctions violations. The DOL is rejecting an appeal made by Public Citizen to uphold mandatory rules that would curtail BNP’s ability to engage in certain complex investment activities.
Wall Street has run amok over the American and world economies. But law enforcers have failed to hold accountable fraudsters and even financial institutions that enable global violence. Now, the U.S. Department of Labor (DOL) is granting another waiver from penalties that are intended to keep retirement savings safe from criminal firms.
The DOL says that the conditions it is imposing with the waiver will ensure compliance with money management safety standards. That’s Alice-in-Wonderland logic: The DOL says that following its own rules wouldn’t affect BNP’s behavior, but granting a wavier would.
Regulatory agencies from the DOL to the U.S. Securities and Exchange Commission (SEC) must realize that full and aggressive enforcement of rules is necessary for deterrence. When penalties are waived, Wall Street will learn to double down on the same behavior that caused violations.
Public Citizen does commend the DOL for granting our request to improve the auditor requirements at BNP.
U.S. Rep. Maxine Waters (D-Calif.), the ranking Democrat on the U.S. House of Representatives’ Committee on Financial Services, is promoting legislation that would help ensure that the SEC upholds penalties. Clearly, parallel legislation is needed for the DOL.