• Federal Regulators Target Banks and Bank Holding Companies for Deficient Financial Reporting
  • May 26, 2010 | Authors: Aurora Cassirer; Elliot Cohen; J. David Dantzler; Monique M. Fuentes; John R. Gerstein; David W. Ghegan; Bryan B. Lavine; Jacob "Jake" A. Lutz; Tim Mast; Mark E. Nagle
  • Law Firms: Troutman Sanders LLP - New York Office ; Troutman Sanders LLP - Atlanta Office ; Troutman Sanders LLP - Irvine Office ; Troutman Sanders LLP - Washington Office ; Troutman Sanders LLP - Atlanta Office ; Troutman Sanders LLP - Richmond Office ; Troutman Sanders LLP - Atlanta Office ; Troutman Sanders LLP - Washington Office
  • Federal agencies have targeted banks and holding companies for deficient financial reporting over the last several years, but the stakes got higher when the U.S. Attorney for the Eastern District of Virginia established a new task force targeting financial crimes and securities fraud. As reported in The Wall Street Journal on Friday, May 14, the goal of this nation-wide, multi-agency task force is to focus on white collar crime - and to target high profile cases - using an investigative task force of federal, state, and local entities to crack down on financial crime and securities fraud. The task force will be located in the Eastern District of Virginia, which is also home to the SEC EDGAR data base and numerous FDIC facilities, thereby providing possible jurisdiction over potential defendants.

    Banks and their holding companies should take proactive measures to prepare for a more critical level of review in connection with financial disclosures. Such proactive measures include involving the bank’s outside banking and securities counsel to assess current financial reporting procedures and make recommendations for improvement, the bank’s outside accountants, and third-party loan review experts. In addition, engagement by management and the board of directors is essential to show active and responsible supervision of financial reporting responsibilities.

    Investigations are being conducted by federal bank regulatory agencies, the OCC, the Department of Justice, SIGTARP (Special Inspector General for TARP), the SEC, the Commodities Future Trading Commission, and, now, this new task force. These potential investigations may result in administrative actions, civil litigation, and criminal claims against banks, holding companies, and their directors and officers.