Getting to the top of the legal profession in Nigeria, is a daunting and Herculean task. Reaching the pinnacle however, as an academic through litigation, may even be harder. Professor Taiwo Osipitan, SAN, the son of distinguished Legal Practitioner, Chief Bayo Osipitan, was the first Academic to be elevated to the rank of Senior Advocate of Nigeria in 2002, based on his performance as a Litigator. In a chat with Onikepo Braithwaite and Jude Igbanoi, he expressed his views on burning issues in the polity, including Nigeria’s seemingly unending fight against corruption, constitutional amendment and the much-desired review of the Evidence Act

Prof, Many are protesting that it is not only unconstitutional, but immoral that former Governors that are now members of the National Assembly and also serving as Ministers, should be earning exorbitant pensions from their old roles and fat salaries in their new ones, when old pensioners are being owed their pittance pensions (having served the country for many years in their youth), and many Nigerian workers are not only being paid less than a living wage, but have been owed salaries for several months. Do you agree with this protest? What is the position of the law on this issue?

There is a fundamental distinction, between Law and morals. A Law does not cease to exist, merely because it is considered immoral or unjust. The recent protests are off shoots of non-payment of pensions and salaries of retired Civil Servants and serving Public Officers respectively. Prior to the protests, political office holders who had served in the public sector, were paid their pensions as retirees and salaries and allowances as serving political office holders without protests. I am not aware of any Law, which deprives a person of earned pension, merely because such a person subsequently becomes a political appointee, or has been elected to serve as a Legislator or State Governor. Section 173 of the 1999 Constitution for example, guarantees and protects pension rights of retired public officers.

The Pension Reform Act, also transfers pension related issues to Pension Fund Administrators. It further introduced contributory pension scheme. Employers and Employees are obliged to contribute to pension funds. The issue here is purely legal. Are we saying those retirees who contributed to pension funds whilst in employment, should be deprived of their pension rights because of their decision to serve as political office holders?

In order to prevent simultaneous collection of pensions, salaries and emoluments by political office holders, relevant Laws will have to be amended, in such a way that Political office holders are made to elect between payment of their pensions and salaries/allowances during the period that they occupy political offices. Alternatively, some of the political offices should be part time and only sitting allowances should be paid to holders of such offices. We must however, be careful and avoid creating the impression that it is an offence to serve the Nation in the capacity of political office holders, through arrangements which short change our retirees turned political office holders.

The debate as to whether the appointment of the EFCC Chairman requires Senate confirmation still rages on. What is your opinion on this matter?

The controversy centres on the conflict between Section 2(3) of the EFCC Act, which prescribes that appointment of Chairman of EFCC is subject to Senate confirmation and Section 171(1) (d) of the 1999 Constitution (as amended) which dispenses with Senate confirmation of appointments of Heads of extra Ministerial Departments.

By virtue of Section 171(1) (d) of the 1999 Constitution (as amended) Mr. President does not require Senate confirmation, in order to appoint Head of an extra Ministerial Department. The words “extra Ministerial” are not defined in the Constitution. Extra Ministerial Departments, are Government Departments which function without ministerial oversight/control. They are also Government Departments, whose activities/functions overlap more than one Ministry. EFCC is not placed directly under the control of a particular Ministry. It (EFCC) co-ordinates various Laws and relevant agencies with respect to corruption, financial and economic crimes related issues. It has liaison offices in various agencies, and financial supervisory institutions that are involved in the eradication of Economic and Financial Crimes. EFCC is therefore, an extra ministerial body.

Evidently, there is a conflict between the EFCC Act and the Constitution, on the issue of Senate confirmation of appointment of the Chairman of EFCC. Whereas, the former prescribes Senate confirmation of the appointment of EFCC Chairman, the latter dispenses with Senate confirmation. EFCC Act is an existing Law by virtue of Section 315 and 318 of the 1999 Constitution. The Constitution is the Nation’s supreme Law/grundnorm. All existing Laws must be in harmony with Constitution, in order to be valid. Section 1 (3) of the Constitution, stipulates that where there is a conflict between the Constitution and an existing Law, the provisions of the Constitution will prevail, and the existing Law shall be null and void to the extent of its inconsistency with the Constitution.

Therefore, Section 2(3) of EFCC Act which prescribes Senate confirmation of the appointment of EFCC Chairman, must on the strength of supremacy of the Constitution, give way to the Constitutional provision on non-confirmation by Senate. The appointment of EFCC’s Chairman consequently, does not require Senate confirmation.

In the event of a law suit at the instance of either the Senate or Mr. President, I do not see the Supreme Court exercising original Jurisdiction. The expanded original Jurisdiction of the Supreme Court, is limited to disputes between Mr President and the National Assembly, in so far as the disputes relate to the right of the aggrieved party. National Assembly consists of Senate and House of Representatives. Therefore, the dispute must involve the two Legislative bodies, which jointly make up the National Assembly, as opposed to a dispute with one Legislative body, (Senate). Under Section 318 of the Constitution, National Assembly is defined as “the Senate and the House of Representatives established by this Constitution”. A dispute between the Senate and Mr. President, is obviously not a dispute within the expanded original jurisdiction of the Supreme Court.

Again, the cause of action in such a case, will deal with the confirmatory powers of Senate with respect to the appointment of EFCC Chairman, and the right of EFCC Chairman to be appointed and to function in office without Senate confirmation. Such dispute deals with control and management of EFCC, which is an agency of Federal Government. Interpretation of the Constitution as it affects an agency of the Federal Government of Nigeria, will occupy the centre stage in such dispute. These causes of action are within the exclusive original jurisdiction of Federal High Court by virtue of Section 251(1) (p)(q) & (r) of the Constitution.

May I counsel that the National Assembly should concentrate on its Law making and legitimate oversight functions, instead of attempting to expand its authority beyond its constitutional powers.

Is the Government losing the fight against corruption? The EFCC has been criticised even by the Presidency, for losing so many of its cases. As one who has handled many cases against the EFCC, would you say this is fair criticism? How can the Commission be better placed to perform its duties of fighting corruption? What steps must be taken to make this fight effective?

In every case, there is usually a winner and a loser. I do not agree that EFCC is losing most of its cases. It has won and lost cases. EFCC cannot and is not expected, to win every case. EFCC fights corruption, Economic and Financial Crimes. These crimes are like cancer, which has eaten so deeply into the fabric of our society. These crimes cannot be uprooted over-night. When you fight these crimes, their perpetrators will fight back. Persons who are neck deep in corrupt practices and economic crimes, have very deep pockets. They can afford to hire the best brains, in the legal profession.

Admittedly, EFCC has few good and dedicated prosecutors. Rotimi Jacobs, SAN, Wahab Shittu, Saidu Atteh and Rotimi Oyedepo readily come to mind, as EFCC’s prosecutors in this class. They are however, overworked and evidently fatigued, because they prosecute EFCC’s cases across the Federation and render advisory legal services to prosecuting agencies. Experienced and committed Legal Practitioners should be brought on board, in order to lead other young and upcoming members of the EFCC prosecuting team. The choice of prosecutors, should not be based on friendship and political affiliations with decision makers. It must be based on their track record of performance. We must acknowledge that, hiring experienced Counsel is not a cheap exercise. Government must therefore, be prepared to adequately remunerate such private prosecutors in order to make the exercise attractive and worthwhile.

Lack of deep knowledge by Investigators, of the dynamics of the cases they are investigating also account for loss of some cases. Some of the Investigators are quick to conclude on the culpability of suspects. Some investigators against legal advice, insist on prosecuting obviously bad cases. These investigators blackmail prosecutors. Judges are also not spared of blackmail, by incompetent prosecutors. The Law presumes a Defendant innocent, until his guilt has been established beyond reasonable doubt by the prosecution. There are cases of investigators, who presume the Defendants guilty, and insist that the Defendant should prove his/her innocence.

Some Prosecutors do not know the type of evidence to adduce, in order to prove a crime. They insist on filing of many counts in a charge/information, as if prosecution is a gambling exercise. They also line up many witnesses who, at the end of the day damage the prosecution’s case, through materially contradictory evidence given by them. We also have investigators and prosecutors, who pride themselves with needless publicity in print and news media. They fail to appreciate the fact, that cases are won or lost in Court, on the strength of adequate preparation, gathering and tendering of relevant evidence and insightful final addresses, as opposed to media trial. Prosecutors and Investigators must avoid media trial, and be more thorough in their investigations and prosecution of cases.

It is obvious that the Constitution of Nigeria requires a complete overhaul. What major areas have you identified that require amendment or outright expunging from the Constitution? Some are saying that those that are agitating for the restructuring of Nigeria, do not seem to have a coherent plan as to how Government should go about it. What ideas do you have with regard to how Nigeria can be restructured?

The Constitution is evidently not a perfect document. It cannot be so, because it was drafted by mortals who are themselves imperfect. Perfection is the exclusive preserve of the Almighty God. As we operate a Constitution, the need to amend same to cater for identified defects are revealed. The life of Law is not based on logic, but on experience. Therefore, there is the need for periodic amendment of the Constitution. Undoubtedly we need to amend the Constitution. We however, need good operators of the Constitution whose focal point is on the welfare of Nigerians. We do not need operators with selfish personal agenda. Good followership is also essential, in order to move the Nation forward. We all must be faithful to Nigeria as a Nation, and down play ethnic and tribal sentiments.

I believe that, there is need for restructuring the political and financial affairs of the Nation. The starting point is devolution of powers to the States and Local Governments. However, so much depends on whether we want a very weak centre, in the process of devolution of powers to the States. We cannot afford to balkanise Nigeria, to the point where the centre is weak and defenceless. We must be faithful to Nigeria as a Nation. We need to put Nigeria first, over and above ethnicity. If the centre is weak, we will be unable to curtail internal civil strife and external aggression.

The centre should however, not be too strong as to relegate the State and Local Governments, to the point of irrelevance in the scheme of things. Today, the centre in terms of resources, appointment into offices and distribution of favours, is evidently too strong and attractive. Hence, the clamour for its restructuring. Items in the exclusive legislative list of the Federal Government, such as prison, pensions, stamp duties, Marriages, Evidence Law and Police, should not be exclusive to the Federal Government. It is easier to effectively police a state, using state controlled police force populated by Police Officers from the geographical zone, than sending an officer to police a State outside his/her geographical area.

A State Government has no business collecting Tenement rate using Land Use Charge as its platform, or to Control open spaces. These are local matters reserved for Local Governments, under the Constitution. Autonomy of Local Government Council, should be respected and protected in the restructuring exercise. We need to appreciate the fact that, the restructuring exercise will only achieve the desired results, if those who operate the Constitution and administer resources, are not self-centred. Access to resources and political powers within a restructured zone, must be based on equity and fairness to residents of each zone. We cannot afford domination of the minority by the majority in each zone.

Do you believe that the office of the Attorney-General of the Federation and the Minister of Justice, should be separated?

I do not support the fusion of the Offices of Attorney-General of the Federation and Minister of Justice. The enormity of Attorney- General’s responsibilities, require the separation of the two offices. The Attorney-General is first and foremost, the leader of the BAR throughout the Federation. The office of the Attorney-General of the Federation, should be occupied by a core professional, with keen interest in prosecuting and defending cases in Court on behalf of the Government. Where his presence is required in Court and at Federal Executive Council meeting at the same time, he should step down the latter for the former. He should interact more with the BAR and the BENCH, than with politicians. Insulating the Attorney-General from party politics, ensures even handed prosecution of suspects regardless of political party affiliation. The Attorney-General’s loyalty must be to the Legal Profession, and not to Mr President or government that appoints him/her.

The Minister of Justice should focus on and attend political meetings and Executive Council Meeting. The same arrangement is recommended at the State level. There should be a State Attorney- General and another person should function as the Commissioner for Justice.

It has been said that the legal profession in Nigeria is not only over-populated, the quality of lawyers being churned out in recent times, seems to have lowered. Do you agree? Do you believe that having a 1st degree in another discipline before being able to study law, like what obtains in the United States of America, should be introduced to Nigeria? Will this improve the quality of the legal profession in Nigeria?

There is evidently a general decline in the Educational Standard in Nigeria. The decline is not peculiar to the legal profession. The quality of students admitted to the various Faculties of Law in Nigeria, is not unaffected by the decline in Standard of Education in Nigeria. There are many Faculties of Law. However, there is no remarkable increase in the number of available Law Lecturers. This has resulted in the employment of some Lecturers as full time and part-time lecturers, in two or more Universities. In some cases, these lecturers travel across States, in order to lecture in different Faculties of Law. Apart from the risks associated with long distance travelling, the quality time spent on the road negatively impacts on the lecturers’ productivity.

I do not support the view, that Law should be studied as a second Degree. There is no assurance that, holders of first degrees will be better Lawyers than non-graduates. The likelihood of degree holders working during their studies as Law Students, should not be ignored. We are likely to see more of part-time students and full time workers, if law is made a second degree. This will further negatively impact on the quality of lawyers produced by our Faculties of Law, and the Nigerian Law School.

You played a major role as counsel in the privatisation and unbundling of PHCN, and today Nigerians are still groping in darkness. The DISCOs and GENCOs, have not run short of excuses, as to why they cannot meet the power needs of Nigerians. Did you envisage this situation when your Committee was working on this?

As part of the power sector reforms, the Generating Companies (GENCOS) and Distribution Companies (DISCOS) that emerged from the unbundling of PHCN, were sold to core investors who emerged as preferred bidders in the privatisation exercise. We had then hoped, that supply of electricity, would be steady and readily available to Nigerians. Few years after the privatisation exercise, these expectations have not been met.

Core investors borrowed funds from Banks that charged, and are still charging them, high interest rates. Funds that should have been channelled towards improving their facilities, are being utilised to service various Bank Loans. The owners of Discos and Gencos, need experienced and understanding partners, who will patiently see them through these problems, without demanding immediate returns on their investments.

Nigeria’s antiquated Evidence Act, finally saw some amendment in 2005, but there apparently seems to be a lot more to be desired, as the new Act hasn’t addressed the major issues, especially with relation to electronically generated evidence. As the leading expert in this field, what would you suggest as a lasting panacea to this problem?

You will recall, that the Evidence Act, is one of our Colonial legacies, which was introduced in 1945 during colonial rule. Incidentally, there was no major review of the Act until 2011. The 2011 Act, has evidently solved some problems in our Law of Evidence. It has also provided the platform for new problems.

The removal of Section 5(a) of the old Evidence Act from the 2011 Act, has created problems in cases where there are gaps in the Law. The jettisoned provision, had always provided the platform, for aligning our Evidence Law, with developments in other Jurisdictions when there were lacunae in our Law of Evidence. Today, any rule of Evidence not incorporated in the Evidence Act, or any statute with a flavour of Evidence, is irrelevant and not recognised by our Courts. Given the slow pace of Legislative response to new global developments, the removal of Section 5(a) of the old Evidence Act from the 2011 Act is very unfortunate, because of its suffocating effect on the development of our Evidence Law.

Electronic/Computer generated evidence, stands tall as the greatest achievement of the 2011 Evidence Act. However, on account of the tradition of importing rules/Laws from other Jurisdictions hook, line and sinker, the framers of the Evidence Act have created more problems than they set out to solve.

Admissibility of Electronic evidence under the 2011 Act, is evidently a welcome development. However, the conditions attached to admissibility and evaluation of electronic evidence under the 2011 Act, create avoidable controversies. A party, cannot just tender electronic generated documents, the way other documents are tendered in Court. The message from the apex court, in the case of KUBOR v DICKSON (2013) 4 NWLR (Pt.1345) page 534, is that the proponent of the Electronic generated document, is expected to give foundation evidence, on the status of the computer/device which was utilised in producing such document. It must be stated that, at the time the document was produced, the device was in good condition and did not malfunction. The foundation evidence, is expected to be given by a regular user of the computer, or a person who is familiar with the condition of the computer. The question is, can a user who is not an expert in Electronic Engineering, attest to the good state of the device at the time it produced the documents, without running foul of the rules on expert evidence. What if the device/computer which produced the document, is located abroad? How do we obtain the foundation evidence, from the regular user who is abroad? What is the weight to be attached to such foundation evidence, where the person who issues the Certificate of worthiness of the device is abroad and unavailable for Cross-examination?

Who certifies soft copies of public documents, that are in the public domain? Which of the devices is to be certified? Is it the device used in producing the document, or the device used in copying the already produced document?

And what if the device is the opponent’s device? From experience, it is easier for a camel to pass through the eye of the needle, than for an opponent to certify the state of his/her device that produced the document, if he/she realises that the document will be used against him or her. Few litigants will assist their opponents to establish a case against them, by certifying documents produced by their devices only for the documents to be used against them. These are two out of the problems of the 2011 Evidence Act. The need to take a second look at the Act is evident.

Last year the news broke that your law firm was going into a strategic collaboration with the law firm of Odujirin & Adefulu. Kindly, shed some light on this, as it was not quite clear whether it was a partnership between the firms or just a loose professional alliance?

This is a strategic alliance, of two Law Firms that appreciate each Firm’s area of interest and strength. Each Firm retains its identity, but collaborates in various ways, in order to ensure efficient and prompt service delivery to Clients. The overall objective, is to utilise each firm’s expertise to achieve Clients’ satisfaction. The arrangement, has been fruitful and/beneficial to our firms and Clients respectively.

You are a distinguished academic, but you were called into the Inner Bar based on your performance in litigation. Why did you choose the route of practice instead of academics? What informed your path to the rank of Silk?

I elected not to utilise my academic status, as the platform for my elevation to the inner BAR. Prior to my elevation in 2002, and to the best of my knowledge, there was no Professor of Law, who was still in active service of his/her University, that had been conferred with the rank on account of his/her Court appearances. Most of my senior colleagues were elevated to the rank of Senior Advocate of Nigeria, on account of their academic exploits or as legal practitioners, after they had ceased to be in the University system.

The desire to be the first serving Professor, to be conferred with the rank through the route of Legal Practice, informed my decision. Luckily, my Dad, Chief Bayo Osipitan has a thriving Law Firm, with very keen interest in advocacy. It was easy for me to utilise the cases in Chambers, as the platform for my elevation to the Inner Bar, through the route of legal practice. On a lighter note, although equity leans against double portion, however, equity excepts twins from the general rule, by way of a departure from the rule. Equity supports double portion in matters affecting twins. Hence, my recognition as a Professor and my elevation to the rank of Senior Advocate of Nigeria, through the route of Legal Practice.

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Viet Nam News

HÀ NỘI — Prime Minister Nguyễn Xuân Phúc has demanded that all corresponding government departments, agencies and institutions to adjust policies as part of an “action-minded” government, to unburden Vietnamese firms of unnecessary business regulations, namely redundant business permits and categorisation.

In the past month, the PM has requested the Việt Nam Chamber of Commerce and Industry (VCCI) and the Central Institute for Economic Management (CIEM) to conduct research on business conditions in Việt Nam, with emphasis on legislation and procedures that may be deemed obstructive to business development.

Findings from this research must be submitted to the Ministry of Planning and Investment (MPI) and the Ministry of Justice (MoJ) by August 10.

Officials from the two ministries will then compile a list of legal documents on business conditions that the VCCI and CIEM consider excessive, and work together with the Government Office so that the PM can receive a full report with detailed solutions for a better business environment by August 25.

The move is considered necessary for a “government of action and integrity that nurtures development and better serves the people”, according to PM Phúc.

Got permits?

A key issue that calls for the PM’s attention is that out of the current roster of 243 business branches and sectors that require legal permissions from government authorities, 16 business branches do not in fact need such permits, said Đậu Anh Tuấn, Director General of the Legal Department of the VCCI.

For example, the logistics sector already consists of numerous sub sectors with their own business permits, and yet still requires its own permit. Such overlaps are both time consuming and hard to manage. This also applies to other businesses in the import – export sector that require a permit for every part of the production chain.

This was further emphasised by PM Phúc at the Government’s regular meeting last July, where he commented that “these permits are proliferating to the point that businesses complain to no end, and they are the cause for further, more serious administrative problems”.

The VCCI found that there are currently a total 5,719 business conditions, commonly referred to as permits, with the Ministry of Industry and Trade (MoIT) coming in first place, issuing 1,220 permits for 27 business branches under management and the Ministry of Construction (MoC) in last place with 106 permits for 17 business branches.

Tuấn said that out of the three main business sectors of trade, transportation and technology, the VCCI also found many other requirements that are obstructing market growth and business expansion.

He gave an example of regulations requiring transportation companies to have a detailed business plan approved by the corresponding authority, or for marine shipping companies to have an established legal office in order to be given official business permission.

Trần Hữu Huỳnh, Chair of the Vietnam International Arbitration Centre (VIAC), said in an interview with the Government’s online newspaper that even though the Government and other departments have been making tremendous efforts in constructing the list of business permits in the 2014 Law on Investment, there are still deficiencies and a lack of practicality.

“This is no longer the work of government administrative officials, but simply a matter of firms’ self management, which can be adjusted through market forces that do not require any governmental interference,”  Huỳnh concluded.

Action minded, action carried

Tuấn went on to say that he was deeply impressed with the PM’s urging of government bodies in charge of business rules and permits to lessen the burden for Vietnamese firms. He did not consider the PM’s direction stemming from any previous agenda, such as Resolution 19 or Resolution 35, but rather from his own ideas, sense of action and leadership.

“I am certain the PM and the Government’s Office are gearing up for practical and effective action to clear the path to business development,” said Tuấn.

Nonetheless, Huỳnh felt that at present, there is still much to be done.

He said the VCCI and CIEM’s research is limited to a number of ministries and business branches, roughly 25 per cent of total business permits. Huỳnh urged that there must be a comprehensive and thorough survey across all business sectors.

Huỳnh also suggested there are hidden permits and legal loopholes that can cause difficulties for firms, which must be promptly discovered and dealt with to prevent future problems.

Tuấn added that there should be open discussions involving firms, economic experts and government administrators, in order to achieve complete and satisfactory solutions.

At the Vietnam Private Sector Forum held on July 31, 2017, up to 65 per cent of firms answered that an action-minded government is their ideal, with 24 per cent choosing a government with integrity at the top of their list and 11 per cent opting for a constructive government instead. — VNS

 

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Firms could face fines of up to £17m or 4% of global turnover if they fail to protect themselves from cyber-attacks, the government has warned.

The crackdown is aimed at making sure essential services such as water, energy, transport and health firms are safeguarded against hacking attempts.

Firms will also be required to show they have a strategy to cover power failures and environmental disasters.

Digital Minister Matt Hancock says any fines would be a last resort.

They would not apply to firms which had put safeguards in place but still suffered an attack, the Department for Digital, Culture, Media and Sport (DCMS) said.

‘Safest place in the world’

Mr Hancock, who is launching a consultation on the plans, said: “We want the UK to be the safest place in the world to live and be online, with our essential services and infrastructure prepared for the increasing risk of cyber-attack,” he added.

The DCMS said firms which take cyber-security seriously should already have measures in place to prevent attacks or systems failures.

It said the consultation was aimed at determining how to implement the Network and Information Systems (NIS) directive which becomes law across the EU next May.

It is separate from the General Data Protection Regulations (GDPR), which are aimed at protecting data, rather than services.

The GDPR will replace the UK’s Data Protection Act 1998 from 25 May next year and the government has confirmed that the UK’s decision to leave the EU will not change this.

Earlier this year, NHS services across England and Scotland were hit by a large-scale cyber-attack that disrupted hospital and GP appointments.

And the threat to firms from cyber-attacks appears to have grown.

Nearly half (46%) of British businesses discovered at least one cyber-security breach or attack in the past year, a government survey earlier this year found.

That proportion rose to two-thirds among medium and large companies.

Most often, these breaches involved fraudulent emails being sent to staff or security issues relating to viruses, spyware or malware.

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REUTERS/Wong
Campion

Penalties imposed during the first half of 2017 on Wall Street
firms by their regulators — the Securities and Exchange
Commission (SEC), the Commodities Futures Trading Commission
(CFTC), and the Financial Industry Regulatory Authority (Finra) —
plunged 65% compared to the same period in 2016.

During the first half in 2016, $1.4 billion in fines were levied
on Wall Street firms by the three regulators. In 2017, the total
was down to $489 million, according to data collected
by The Wall Street
Journal.

In this context, Wells Fargo doesn’t have much to fear after
admitting a week ago that since 2012 it had quietly
added unneeded
comprehensive and physical damage insurance to the car
payments of 570,000 (or 800,000) of its auto-loan customers.

The SEC imposed $318 million in fines in the first half, down 58%
from the same period a year ago, based
on The
Journal’s search of federal documents and
publicly available records on the SEC’s website, along with data
provided by University of Virginia law school professor Andrew
Vollmer.

In the first six months of 2016, the SEC imposed $750 million in
penalties. This included a case filed in June that year with a
penalty of $358 million; it alleged a bank had misused customer
assets. By contrast, the largest fine so far this year has been a
soft slap on the wrist of $30 million.

The Journal explains:

SEC Chairman Jay Clayton, who took over in May, has expressed
concern about the size of corporate penalties the SEC has
levied in recent years, saying they hurt shareholders and it
would be better to punish guilty individuals.

At the CFTC, the fines imposed in the first half plunged 74%, to
$154 million. In the first half of 2016, fines had reached $603
million, which included Libor-rigging and Euribor-rigging cases,
with Goldman Sachs alone getting docked for $120 million.

At Finra, a legendary wrist-slapper, the wrist-slapping in the
first half this year plunged 77% year-over-year to just $17
million. Finra is a private corporation that acts as
self-regulatory organization for its member brokerage firms and
exchange markets but is ultimately overseen by the SEC. In the
first half of 2016, it imposed at least five fines of over $1
million and publicly announced each one of them. Public shaming
used to be part of the process. Not anymore. In the first half of
2017, it imposed only two fines of over $1 million, without
publicly announcing either one.

“There has been a dialing back,” Brian Rubin, a partner at law
firm Eversheds Sutherland, told The
Journal. Finra “has gotten lot of feedback from member firms
that there has been a big increase in fines [in recent years]
…and that’s something they’re looking at.”

But 2016 had already been a low-water mark as the agencies under
the Obama administration were dialing back their efforts. In the
full year of 2016, penalties imposed by all three agencies had
plunged by over 50% from 2015, from $4.4 billion in 2015 to $2.1
billion in 2016, which had been the lowest level of fines since
2012. At this pace, penalties in 2017 are on track to drop to the
lowest level since the Financial Crisis.

The regulators say it’s no big deal. The
Journal:

Kevin Callahan, the spokesman, said the
SEC doesn’t consider six months to
be long enough to draw any lessons about the agency’s
effectiveness. The number of cases brought over the two periods
was “relatively constant,” he added. [It was just the size of
fines, which were minuscule].

James McDonald, enforcement chief at the CFTC,
said variations in penalty tallies from year to year are normal
and “not an indication of any changes in our commitment to
vigorously prosecute violations of our laws to preserve market
integrity and protect customers.” He said, “There will be no
let up, no pause, and no delay in our enforcement program.”

Nancy A. Condon, a Finra spokeswoman, said
“vigorous enforcement is an essential part of our oversight.”
The nongovernmental watchdog, which oversees brokers and
brokerage firms, assesses its regulatory programs “based on our
ability to efficiently and effectively identify and discipline
bad actors,” she added, and “not on the volume of actions or
overall quantity of fines.”

Wall Street has been able to place four former Goldman Sachs
executives into top positions in the Trump administration: Gary
Cohn, Dina
Powell, Steve Bannon, and Steven Mnuchin (famous for having
bought the mortgages of collapsed mortgage lender IndyMac from
the FDIC in 2009, folded them into OneWest Bank, dealt with them
in a controversial manner, and sold the whole schmear for a
blistering profit in 2015). The fifth, Anthony
Scaramucci, didn’t last long.

And Wall Street has been on an all-out lobbying campaign in
Washington. Among its goals is the gutting of the post-Financial
Crisis bank regulation bill, the Dodd-Frank Act. And Wall Street
firms, along with the Chamber of Commerce and the Financial
Services Institute, are lobbying fiercely to get the size of the
penalties reduced to where the consequences for wrongdoing don’t
matter at all anymore.

Congress is responding favorably. The administration is rolling
back regulations. And fines have already plunged under a
“business friendly” attitude that has spread to the regulatory
agencies. Clearly, the only lesson learned from the Financial
Crisis is that Wall Street always wins.

One of the big lobbying thrusts is for Congress to lower the bank
capital requirements that it had raised after the Financial
Crisis to keep banks from collapsing when things get ugly again.
But FDIC Vice Chairman Thomas Hoenig, a regulator left over from
the post-Financial Crisis years, is not happy. The “real economy
has little to gain, and much to lose,” he told the Senate. Read…
 Mega-Banks Blow 100% of Earnings on Share-Buybacks
& Dividends, Crimp Lending, Constrain Economy

Read the original article on Wolf Street. Copyright 2017. Follow Wolf Street on Twitter.

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