Shades of Spitzer

State enforcement officials are making an end run around federal officials.

That’s according to a client alert from Ballard Spahr titled – Shades of Spitzer: New York Law Enforcement Takes Aggressive Stance on AML and LIBOR Scandals.

The client alert highlights “a one-two punch reminiscent of Eliot Spitzer’s tenure as New York Attorney General.”

New York’s law enforcement authorities “beat their federal counterparts to the punch by bringing proceedings in the most highly publicized financial scandal of the year – Standard Chartered Bank’s alleged money laundering on behalf of Iranian entities and the alleged manipulation of LIBOR,” the Ballard Spahr attorneys wrote.

Last week, New York’s Superintendent of Financial Services, Benjamin Lawsky, last Tuesday announced a $340 million settlement with Standard Chartered to resolve allegations that the bank laundered $250 billion through its New York branch on behalf of the Iranian government, Iranian banks, and other Iranian corporate entities.

And New York Attorney General Eric Schneiderman “has demanded documents from a number of large international banks as part of an investigation into whether there was any collusion to fix interest rates determined under LIBOR that could have injured New York borrowers or investors.”

“As in the Spitzer era, federal authorities have been critical of New York’s initiatives,” the Ballard Spahr attorneys wrote. “New York can be expected to cooperate with federal authorities, but these recent developments suggest impatience with the lagging pace of those parallel investigations. Particularly interesting is the possibility that, if the documents sought in the New York probe should bear fruit, other state law enforcement officials might be emboldened to follow suit.”

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