Fines & Penalties Monitor: March 2017

Like February, March was a relatively quiet month for fines, penalties, and settlements. Our large bank group – the 18 largest institutions headquartered in the U.S. and E.U. – incurred three fines, bringing our 2017 total to $1.6 billion.

In mid-March, Royal Bank of Scotland, Deutsche Bank, and Wells Fargo reached a joint settlement of $165.0 million in a class-action lawsuit alleging that the banks misled investors about the quality of mortgage-backed securities that they underwrote for the now-defunct NovaStar Mortgage (information on the settlement amount for each individual institution was not disclosed).

Towards the end of the month, Wells Fargo made its way into the headlines again after agreeing to a $110.0 million settlement in a class-action suit related to its retail sales practices and the unauthorized opening of accounts to meet sales quotas. Deutsche Bank also reappeared in the news after reaching a settlement with the DOJ related to the bank’s alleged role in manipulating LIBOR. The settlement included a $150.0 million fine and an additional $625.0 million criminal penalty. All in all, $1.1 billion in settlements were added to our total this month.

As we near the end of the first quarter of 2017, total fines, penalties, and settlements lag behind levels seen last year. At the end of March 2016 fines incurred had reached a total of $12.5 billion, due primarily to several large settlements related to RMBS activities that were finalized in the very beginning of that year. There are still several RMBS-related lawsuits pending as of March 2017. We also have not seen the last of settlements related to LIBOR manipulation, as at least one lawsuit involving nine of the 18 institutions that we track is continuing to work its way through the courts. Other investigations regarding money laundering, client tax evasion, and discriminatory lending are ongoing at this time and could result in new penalties later this year. This is a long way of saying that while the first quarter has been quiet, the remaining quarters of 2017 may be less so. We hope you will check back with us next month as we continue to monitor these developments.



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