U.S. Maybe Kinda Taking It Out A Little Hard On Foreigners


The French government may have been onto something when whining that the U.S. was being très unfair to BNP Paribas.

New research suggests that overseas firms like BNP Paribas do in fact pay bigger fines and plead guilty more often than United States companies. One reason may be that prosecutors single out only the most serious cases abroad. But the differences feed suspicions that the United States is playing favorites.

BNP agreed on Monday to pay almost $9 billion while admitting criminal violations of United States sanctions. Credit Suisse and a subsidiary of UBS also pleaded guilty recently to tax avoidance and interest-rate rigging, respectively. JPMorgan Chase, Bank of America and other United States banks have paid billions of dollars in penalties but have, so far, avoided criminal liability….

United States criminal fines from 2001 to 2010 were about five times greater on average for foreign firms than for their American counterparts, a University of Virginia Law School study has found. The average penalty was 22 times bigger for foreign companies after adjusting for the type of crime and whether the company was listed. And while about 40 percent of listed United States firms accused of crimes pleaded guilty between 2001 and 2012, more than 50 percent of foreign ones did.

On the other hand, now that the Justice Department thinks it knows that it can come down like a ton of bricks on giant banks and not destroy the global economy, banks foreign and domestic—but mostly foreign—can expect more phone calls from Eric Holder.

The muted reaction from investors to guilty pleas by BNP Paribas SA and Credit Suisse Group AG is likely to set the stage for more stiff penalties, including criminal charges, for big banks from the U.S. Department of Justice, analysts say.

"What this signals is that if a conviction will not shut down the company, than there's no reason not to convict," said Brandon Garrett, a University of Virginia law professor who tracks corporate prosecutions.

U.S. Justice Seems to Fall Harder on Foreign Companies [DealBook/Breakingviews]
Analysts Expect More Penalties, Charges for Big Banks [WSJ]