Justice Department Urges Banks to Implicate Employees

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Marshall L. Miller, the No. 2 official in the Justice Department’s criminal division.Credit Filippo Monteforte/Agence France-Presse — Getty Images

The Justice Department has a suggestion for banks hoping to avoid criminal charges: Rat out your employees.

Marshall L. Miller, the No. 2 official in the Justice Department’s criminal division, detailed in a speech on Wednesday how banks would either earn credit for exposing nefarious individuals or face charges for protecting them.

“At the risk of being a little too Brooklyn, I’m going to be blunt: If you want full cooperation credit, make your extensive efforts to secure evidence of individual culpability the first thing you talk about when you walk in the door to make your presentation” to the Justice Department, Mr. Miller, a former federal prosecutor in Brooklyn, said at the Global Investigation Review Program in New York. He then added: “Make those efforts the last thing you talk about before you walk out.”

The Justice Department’s recent criminal cases against Credit Suisse and BNP Paribas provide cautionary tales of Wall Street obfuscation, said Mr. Miller, who offered the first detailed explanation of the reasoning behind those cases. In the case against BNP, which was accused of doing business with countries like Iran that are blacklisted by the United States, the bank stalled the investigation to the point that prosecutors missed the legal deadline to charge individuals.

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The Justice Department said the criminal case against BNP Paribas provides a cautionary tale of Wall Street obfuscation.Credit Jacques Brinon/Associated Press

In turn, rather than receive a so-called deferred-prosecution agreement, BNP was forced to plead guilty in a rare criminal action against a giant global bank. The charges came on the heels of a guilty plea by Credit Suisse, which had been accused of enabling American clients to hide their wealth overseas.

“This is one of the lessons that should be drawn from the BNP Paribas and Credit Suisse cases,” Mr. Miller said. “Through parent-level guilty pleas and multibillion-dollar penalties, BNP Paribas and Credit Suisse paid a historic price not only for their criminal conduct, but also for their insulation of culpable corporate employees.” He added that “the lack of timely and complete cooperation” — a factor that prosecutors must weigh when deciding how to proceed with corporate prosecutions — was one of the “tipping points that led to the charges.”

The comments by Mr. Miller reflect the Justice Department’s renewed interest in charging bank employees rather than just the banks. It is a sore subject for the Justice Department, which faced withering criticism from Congress and from the public for not charging any Wall Street executives tied to the financial crisis.

The Justice Department has countered that crisis-era wrongdoing often amounted to reckless or risky behavior, but not criminal misconduct. Senior executives were far removed from the front lines of fraud, the department has argued.

In recent months, however, the Justice Department has pursued actions against bank employees suspected of manipulating foreign currencies. Those cases are expected to conclude in the coming months.

“Corporations do not act criminally, but for the actions of individuals,” Mr. Miller said in the speech, adding, “The criminal division intends to prosecute those individuals, whether they’re sitting on a sales desk or in a corporate suite.”

Mr. Miller’s remarks could provide a window on the Justice Department’s plans for prosecuting the currency-rigging investigation, an inquiry that has swept up several of the world’s biggest banks, including Barclays and JPMorgan Chase.