BUSINESS
02/09/2012 10:23 am ET Updated Feb 09, 2012

Wall Street's All-Star Legal Team Prepares For Battle With Federal Task Force

If you work on Wall Street and you observe some illegal shenanigans, make sure you call up the right Financial Fraud Enforcement Task Force.

Over two years ago, President Obama announced to great fanfare the Justice Department's formation of a Financial Fraud Enforcement Task Force, which was tasked with investigating and prosecuting significant financial crimes.

Now, some of their targets in the financial industry have their own task force, with the exact same title, to help them defend against accusations of wrongdoing. One of Washington D.C.'s most powerful law firms, K&L Gates -- with a client list that includes Goldman Sachs, Bank of America, UBS Financial Services and Man Investments -- just announced its own Financial Fraud Enforcement Task Force, reports FinancialFraudLaw.com. The firm says the task force was set up in response to the Justice Department's launch two weeks ago of a special federal-state initiative led by New York Attorney General Eric Schneiderman to crack down on residential mortgage-backed securities fraud:

Drawing on lawyers from the firm’s securities enforcement, white collar, litigation, financial services, internal investigation, and insurance coverage practice areas, as well as K&L Gates’ deep experience in the substantive mortgage financing issues on which the RMBS Working Group is focused, the Financial Fraud Enforcement Task Force formulates coordinated defense strategies to address allegations of RMBS fraud, mortgage fraud, securities fraud, and other types of financial fraud or discrimination alleged by the government.

The firm boasts that its task force of more than 50 lawyers from its offices around the world includes a former United State Attorney General (Dick Thornburgh), more than a dozen former staffers from the SEC, several former DOJ prosecutors and numerous former securities regulators.

To get a leg up on beating those pesky prosecutors in court, the law firm's all-star team might want to read a new report that gets to the bottom of why there have been so few criminal prosecutions of high-ranking corporate executives in the wake of the financial crisis. The authors of "Observations on the Dearth of Criminal Prosecutions After the Financial Meltdown," published in the Financial Fraud Law Report, cite several reasons: concern for the fragility of the financial system, the "unintended effects" of prosecutions, and the difficulty of proving complex frauds and explaining them to a jury.

Authors James M. Keneally and Serena B. David, who work at a New York law firm, use the case U.S. v. Ferguson as a cautionary tale for prosecutors. In that case, five Wall Street executives from AIG and General Re were charged and convicted of securities fraud, among other charges, over an allegedly fraudulent reinsurance transaction in an attempt to boost AIG's stock price. But their convictions were tossed by a federal appeals court last August due to two "less than glaring errors," write the authors.

Where Are All The Watchdogs?

The State Department has lacked an inspector general for 1,485 days and the Interior Department has been without an inspector general for 1,081 days, according to the Project on Government Oversight's essential new site, "Where Are All The Watchdogs?" The site will track how long such vacancies have existed at government agencies.

Gold Mines Emitting Toxic Mercury

There's more than just gold in them hills in Nevada, judging by the numbers on mercury emissions compiled by California Watch.

The Barrick Goldstrike Mines in Elko and Newmont Mining's Twin Creeks Mine in Golconda both emitted about 1.5 million pounds of mercury, a potent neurotoxin that is considered harmful to pregnant women and small children. Those two mines dominated the list of the country's top mercury-emitting facilities, according to Environmental Protection Agency data.

Quick Hits

  • House Republicans and a few Democrats have come together in a rare show of unity to push legislation that "would make it more difficult for consumer advocates or other groups to obtain sensitive information that banks share with the new Consumer Financial Protection Bureau," Reuters reports.
  • The Federal Trade Commission reached a settlement with robocallers who deceived more than 13,000 customers by claiming to reduce credit card interest rates.
  • Revolving door chronicles: former Commodity Futures Trading Commission commissioner Michael Dunn is going to work as a senior policy adviser at lobbying powerhouse Patton Boggs, where he'll help clients "navigate complex regulatory processes and agencies."

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