The Wall Street Journal of Monday, April 9, 2007 (Page A3), had an interesting article describing an effort by ABN AMRO Holding NV ("ABN") to settle with the Department of Justice ("DOJ") regarding past money transactions by ABN AMRO's New York and Illinois banking offices. The effort to settle for events that occurred prior to August 2004 is apparently motivated (according to the article) by Barclay PLC's desire to have ABN resolve the matter with the DOJ before announcing a transaction with ABN.
This process highlights an important but aggravating and tactical issue for clients and their counsel. While you may resolve satisfactorily a regulatory problem with your direct Federal and State regulators (in this case the Federal Reserve Board, the Dutch banking authorities, OFAC and the banking authorities of New York and Illinois), the matter has not been conclusively resolved until there is a settlement with the DOJ or the DOJ has indicated in some fashion that they are not involved in the matter or not interested in pursuing the issue. At times the DOJ's involvement may include the local U.S. Attorney's Office. Thus, a universal settlement early on is a good objective. However, the rationale for resolving a regulatory matter entails consideration of many issues, including prompt settlement with the regulatory authorities. What we have noted, though, is that DOJ appears to be using the possible imminence of a major transaction as leverage for negotiations. The demand by DOJ may include a sizeable money payment to the U.S. Treasury just to eliminate the issue or some other type of enforcement action. What should be noted here is that the actions of concern happened well over two years ago (before August 2004), and were extensively examined by the Federal bank regulators and resulted in the payment by ABN of $80 million in penalties.
The resolution of the DOJ approach often comes down to whether the company wants to deal with challenging DOJ and the attendant publicity or whether the settlement is just part of the cost of the "deal." Unfortunately, it does not necessarily turn on what is the right course of action for "justice to be served."
This article is presented for informational purposes only and is not intended to constitute legal advice.
