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Thursday, March 28, 2024

Wall Street’s Kangaroo Courts Perpetuate a Business Model of Fraud

Courtesy of Pam Martens.

Susan Antilla

Susan Antilla

Speaking of the Wall Street and global banks that populate London’s financial district, John Mann, a Member of Parliament, asked the rhetorical question at a Treasury Select Committee hearing on February 4, 2014: “Have we or have we not just had the biggest series of quantifiable wrongdoing in the history of our financial services industry?…Is there any other industry in recorded history in this country who’s had a comparable level of quantifiable wrongdoing to your knowledge?”

The answer, of course, is that there is no other industry on either side of the pond that has inflicted as much economic pain as Wall Street through “quantifiable wrongdoing.” And yet, the U.S. government continues to allow this serially crime-infested industry to run its own private justice system where both its customers and its employees are barred from taking their lawsuits into a court of law so that the public and the press can monitor the proceedings and have future access to the detailed court records to analyze patterns of crimes or recidivism.

Depending on which side you’re on, this private justice system on Wall Street has various monikers. Wall Street firms and their lawyers call it “mandatory arbitration” or “pre-dispute arbitration agreements” and say it is fair and fast. Many plaintiffs who have been through the system call it “a kangaroo court.” The plaintiffs’ bar has in the past produced evidence of an intentionally rigged system. Feminist Gloria Steinem once dubbed it “McJustice.”

One veteran Wall Street reporter, Susan Antilla, has spent two decades chronicling the abuses occurring under Wall Street’s private justice system while also writing on the myriad other ways Wall Street has tilted the playing field. In her 2002 book, Tales from the Boom Boom Room: Women vs Wall Street, published by Bloomberg Press, Antilla devoted a full chapter to the “No-Court System.” The award winning book traversed a pitched five-year Federal court battle in which I and other Wall Street women sued the retail brokerage firm, Smith Barney, the New York Stock Exchange and the National Association of Securities Dealers (NASD) for effectively voiding the nation’s civil rights statutes by forcing these employee claims into an industry-run arbitration forum. The lawsuit documented that serious sexual assaults were occurring, as well as an enshrined system of sexual harassment, because Wall Street correctly perceived it had built an impregnable wall of immunity around itself. Wall Street had not only masterminded a “No-Court System,” it had carved out a no-law-zone for the financial securities industry.

Just where this kind of no-law system can lead has found a textbook case in the corrupted culture and collapse of Smith Barney’s parent, Citigroup, during the 2007-2010 financial crisis. To stay alive, Citigroup was propped up with the largest taxpayer bailout in U.S. history, including a $45 billion equity infusion; over $300 billion in asset guarantees; and more than $2 trillion in initially secret, low-cost loans from the Federal Reserve. Its thank you to the U.S. taxpayer was to be charged with, and admit to, a criminal felony on May 20, 2015 for rigging U.S. foreign currency markets. According to the details in the felony charge brought by the U.S. Justice Department, Citigroup’s illegal behavior in the foreign currency rigging matter spanned a period from December 2007 through January 2013. Outrageously, that includes the period after 2008 when Citigroup was being kept alive with taxpayer money. (See Citigroup’s broader rap sheet here.)

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