Legal Briefing: Bank Pays $500 Million to Settle Criminal Charges


A daily look at legal news and the business of law:

$500 Million to Settle Charges of Helping Iran, Libya, Sudan and Others Do U.S. Business

The Department of Justice announced that Royal Bank of Scotland (RBS), which acquired ABN Ambro in the wake of its losses from Goldman Sachs's Abacus deal, would pay $500 million and agree to a deferred prosecution agreement to settle charges that ABN Ambro illegally processed transactions for financial institutions and individuals from Iran, Lybia, Syria, Sudan, Cuba, and other prohibited countries. ABN Ambro set up a special program to isolate incoming orders from the countries until any problematic information associated with the orders could be stripped, enabling the transactions to then occur. This activity was done in a large way at selected ABN Ambro branches from 1995 through 2005, and occurred in a more limited way after practices were tightened up in 2006 and 2007.

GSK Settles 700 Avandia Cases for $86,000 Each

As the first Avandia trials approached for GlaxoSmithKline (GSK), it decided to clear a bunch of cases by settling with a couple of the plaintiff firms involved, reports Am Law Litigation Daily. In paying a reported $60 million to dispose of 700 cases claiming that Avandia causes heart attacks and strokes in some, GSK seems to be getting off cheaply, given that it works out to about $86,000 per plaintiff. As Bloomberg noted, a GSK analyst had forecast settlements of $500,000 each. What does the settlement mean for the other 3,000+ cases in the pipeline? Hard to say; their fact patterns and stage of case development could warrant more or less. Nonetheless these cheap settlements are a good omen for GSK.

Goldman Being Sued for Nearly Everything

Goldman Sachs (GS) has faced widespread criticism and even shareholder lawsuits because it failed to disclose receiving the "Wells Notice" from the Securities and Exchange Commission that preceded the April 16th civil suit. On Monday Goldman filed its quarterly report, and at pages 138-141 describe the avalanche of litigation the firm is now in or could face in the near future, including mortgage-related matters (including the SEC case, related shareholder litigation, and other suits); auction-product matters; Washington Mutual securities litigation; Greek transactions; sales and trading practices; municipal securities matters; financial crisis related matters; and research related matters. This laundry list makes me wonder: is there any line of business Goldman isn't being sued over?

And in the Business of Law ... Should Business Be More Like Law?

The new dean of Harvard Business School, Nitin Nohria, wants management to become a profession, subject to a code of ethics a la lawyers. Could an enforceable code of ethics banish the greed is good Wall Street mantra? Writing at the Am Law Daily, Stephen Harper suggests that however worthy the idea of making management a profession may be, Nohria should chose a model other than the legal profession. For 20 years, Harper explains, big law firms have increasing copied the MBA's worldview, and he implies it's damaged the legal profession. In any case, I'd be fascinated to see what a business ethics code looks like, and what it's epigram would be. Doctors "First, do no harm", and lawyers "zealously represent their clients". Would MBA's be "make your shareholders and clients money before keeping a penny for yourself?"