The Justice Department expects to bring criminal charges in the coming months in investigations involving financial institutions, Attorney General Eric Holder said Wednesday as he called for better incentives for Wall Street whistleblowers who report crime.
Holder did not describe the investigations in a speech at New York University’s law school except to say that they’re “focused on the conduct of individuals” and involve wrongdoing that has undermined the financial markets.
He used the address to urge Congress to raise a cap on the amount of money a whistleblower can receive for reporting misconduct. Such cooperation is essential since financial criminals are often “savvy enough to avoid using email” and witnesses from within the firm may be the only ones who can provide the “smoking gun” evidence needed for a conviction, he said.
The whistleblower provision of the Financial Institutions Reform, Recovery and Enforcement Act — a law passed after the savings-and-loan crisis of the 1980s — caps whistleblower rewards at $1.6 million. But Holder said that was a “paltry sum” given the amount of money made in the industry and probably not enough to encourage a whistleblower to risk his job by cooperating with the government.
That amount should be raised, he said, perhaps to be more in line with the False Claims Act, which allows whistleblowers to obtain up to a third of the amount of money recovered by the government in any settlement.
“This could significantly improve the Justice Department’s ability to gather evidence of wrongdoing while complex financial crimes are still in progress — making it easier to complete investigations and to stop misconduct before it becomes so widespread that it foments the next crisis,” Holder said in prepared remarks.
The Justice Department has faced criticism for not being aggressive enough in prosecuting financial misconduct, especially arising from the economic meltdown that left millions of American in foreclosure. In the last year, Holder sought to rebut the criticism with multibillion-dollar settlements with JPMorgan Chase & Co, Citigroup and Bank of America, but those deals did not involve criminal charges for individual executives.
Holder defended his record against financial fraud, saying the Justice Department has brought cases against more than 60 financial institutions since 2009, but he also acknowledged that prosecuting individuals has been more challenging.
“This has been a source of frustration for the public for a long time. I understand and share that frustration,” he said.