Fines & Penalties Monitor: December 2016

In December, our large bank group – the 18 largest institutions headquartered in the U.S. and E.U. – reached two particularly large settlements, bringing total fines, penalties, and settlements assessed in 2016 in line with the previous year.

Deutsche Bank agreed to pay a total of $7.2 billion (including a $3.1 billion civil monetary penalty and $4.1 billion in consumer relief) to settle a DOJ investigation into its sale of mortgage-backed securities in the U.S. from 2005 to 2007. Credit Suisse also settled a similar investigation by agreeing to pay a total of $5.3 billion (including a penalty of $2.48 billion and $2.8 billion in consumer relief).

The reason for incurring a fine or penalty was much less varied in 2016 than in the previous year. Settlements related to the sales of mortgage-backed securities during the financial crisis years accounted for 77% of total fines, penalties, and settlements in 2016, versus 43% in 2015. Activities such as LIBOR rigging and foreign exchange rate rigging and manipulation appeared just as frequently in the headlines; however, most of the large penalties associated with those activities were assessed last year. In 2016, penalties associated with these actions accounted for only 3.4% of the total, compared to 34.8% of the 2015 total.

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