State Enforcement Actions Against Financial Sector Misconduct Have Yielded $17 Billion in Company Penalties

by Phil Mattera

A new compilation of regulatory enforcement actions shows that states have collected more than $17 billion in penalties from financial services companies over the past two decades. Most of that sum comes from cases brought by New York State against major U.S. and foreign banks.

The data was assembled as part of the latest expansion of Violation Tracker, a database produced by the Corporate Research Project of Good Jobs First. It is free to use at https://www.goodjobsfirst.org/violation-tracker

“The role of state regulators has become more important than ever, given the weakening of enforcement at the federal level,” said Good Jobs First Research Director Philip Mattera, who leads the work on Violation Tracker.

Good Jobs First collected data on 15,000 successful cases brought by state banking, consumer finance, securities and insurance regulatory agencies over the past two decades with penalties of at least $5,000. The number of cases and penalty amounts vary greatly from state to state.

By far the most vigilant state is New York, whose penalty total is more than $11 billion, derived from 412 cases. Its Department of Financial Services has gone after the world’s biggest financial institutions and has won major settlements such as the $2.2 billion paid by the French bank BNP Paribas for violating international economic sanctions and the $715 million paid by the Swiss bank Credit Suisse for facilitating tax evasion.

California is second in penalties at just over $1 billion but far ahead of New York and other states in the number of cases with a total of more than 2,000 successful actions. Its biggest settlement was the $225 million paid in 2017 by Ocwen Loan Servicing for mortgage abuses.

Three other states have collected more than $100 million in penalties: Arizona ($665 million in 488 cases), Texas ($632 million in 1,097 cases) and New Jersey ($339 million in 398 cases).

Good Jobs First also identified more than 100 cases in which regulators from different states brought cases jointly. These actions are similar to the multi-state attorneys general cases Good Jobs First analyzed in its Bipartisan Crime Fighting by the States report published in September 2019.

State financial regulators participated along with the AGs in some of those cases, which resulted in the payment of tens of billions of dollars in penalties by banks and other financial services companies.

The cases brought solely by groups of state insurance and securities regulators have yielded about $2 billion in penalties since 2000. The most-penalized companies in these cases are: Citigroup ($251 million), American International Group ($204 million), Bank of America ($201 million) and the Swiss bank UBS ($179 million). 

With the addition of the state financial cases, Violation Tracker now contains 437,000 cases with total penalties of $627 billion. Apart from the newly-added financial cases, the database covers workplace, environmental, safety, healthcare and other actions brought by more than 50 federal and 200 state and local agencies.

Good Jobs First, based in Washington, DC, is a non-profit, non-partisan resource center promoting accountability in economic development since 1998. Its Corporate Research Project provides research resources for organizations and individuals concerned about all forms of corporate accountability.