Waivers for Banks with Histories of Criminal and Civil Misconduct

Sep 16, 2015
Press Release

Cummings Seeks Answers on SEC

Waivers for Banks with Histories of  Criminal and Civil Misconduct


Washington, D.C. (Sept. 16, 2015)—Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, sent a letter to the Securities and Exchange Commission (SEC) requesting information about waivers the SEC granted this year to five banks despite their histories of criminal and civil misconduct and their admissions of guilt to felony charges.

“Permitting repeat offenders to continue business as usual poses a severe risk to investors and the American economy,” Cummings wrote. “It undermines the public’s confidence in the ability and willingness of regulators to protect against illegal, improper, and abusive conduct.”

Cummings expressed concern that after Citicorp, JPMorgan Chase & Co., Barclays PLC, UBS AG, and The Royal Bank of Scotland plc admitted to conspiring to fix prices and rig bids for U.S. dollars and euros traded on the foreign currency exchange spot market, the SEC granted waivers allowing all five banks to continue making securities offerings on the advantaged terms available to Well-Known Seasoned Investors. Several of the banks also received additional waivers from the SEC.

“The information I am requesting will help the American people and those they have elected to represent them understand the SEC’s decisions to grant waivers to these banks despite their past misconduct,” Cummings wrote. “This information will also assist Congress in evaluating whether additional laws are needed to help prevent financial institutions from engaging in repeated misconduct.”

Cummings cited securities laws that require applicants to provide a showing of “good cause” and, in certain instances, demonstrate that waivers are consistent with the public interest and the protection of investors.

Since the 2008 financial crisis, at least 30 waivers have been issued to these banks for misconduct and failures to comply with pertinent securities statues and rules, and these violations have produced more than $5 billion in disgorgements, prejudgment interest, civil penalties, and criminal penalties.

Cummings requested that the SEC provide detailed information about the process it used to evaluated each waiver request, including how recidivism was considered, and whether the SEC reviewed prior waivers to ensure that the banks’ guilty pleas to criminal charges did not violate the terms and conditions of existing waivers.

Click here to see the letter to the SEC.

114th Congress