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2008 Financial Crisis Essay

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Fines imposed on banks due to the Financial Crisis of 2008 According to Reuters, an international news agency, a total of $141bn has been paid as fines by banks due to their contribution for mis-selling US mortgages and $44bn to UK customers as compensation. Reuters says ‘The banks risky practices led to the 2008 financial crisis, considered by economists to have been the worst crisis since the Great Depression of the 1930s. The fines have affected the banks' efforts to rebuild capital, reduced dividends for investors and cut the amount firms are able to lend. The misconduct bill is expected to rise by tens of billions more dollars, and many politicians, regulators and industry observers said more needs to be done to deter wrongdoing.’ Below is a list taken from the Securities and Exchange Commission’s website, of financial penalties …show more content…

The remaining $300 million would be paid to the US Treasury. As stated on page 18 of section 2.03, Tier one fines an institution up to $80,000, tier two fines an institution up to $400,000 and tier three fines an institution up $775,000. These tiers remain the same in the cases brought to court, however in court cases, the Securities and Exchange Commission can request the court to seek a financial penalty equivalent to the defendant’s gain as a result of the violation. In the judgment, Goldman Sachs is liable for disgorgement of $15,000,000 and a civil penalty of $535,000,000 following Section 20(d)(2) of the Securities Act of 1933. **CASE REF** SECURITIES AND EXCHANGE COMMISSION, Plaintiff, V. Goldman, Sachs & Co. and Fabrice Tourre.40 It appears that the financial penalty imposed on the Goldman Sachs falls into tier three. Tier three deals with misconduct relating to fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement and causing someone else a substantial

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