• Financial Markets Rescue Package Q&A: Criminal Prosecutions (10 of 10)
  • October 26, 2008
  • Law Firm: Faegre & Benson LLP - Minneapolis Office
  • The federal government's Troubled Asset Relief Program (TARP)--created by The Emergency Economic Stabilization Act of 2008 (EESA) signed into law by President Bush on October 3, 2008--gives the U.S. Department of the Treasury authority to purchase "troubled assets" from financial institutions.

    What effect does the legislation have on criminal prosecutions?

    Q: What duties are created regarding cooperation with FBI investigations and prosecutions?

    A: The EESA requires all federal financial regulatory agencies to cooperate with the FBI and other law enforcement agencies investigating fraud, misrepresentation, and malfeasance with respect to the development, advertising, and sale of financial products.

    Q: What are the criminal implications?

    A: Besides civil litigation, it is likely that the government will pursue criminal charges against individuals whose illegal conduct contributed to the crisis. The FBI has already announced that a task force has opened 26 investigations into whether fraud contributed to the failures of Lehman Brothers, AIG, Fannie Mae, and Freddie Mac. The FBI's investigation extends to 1,400 individuals, in addition to the corporations themselves. While no indictments have yet been issued, it is likely that an investigation of this size and scope will result in a number of criminal prosecutions.