Court’s $1.3 Billion Judgment against Bank of America Signals FIRREA’s Potential Role as a Powerful Substitute for the False Claims Act in Financial Fraud Cases

Court’s $1.3 Billion Judgment against Bank of America Signals FIRREA’s Potential Role as a Powerful Substitute for the False Claims Act in Financial Fraud Cases


By: Douglas W. Baruch, John T. Boese, Jennifer M. Wollenberg

In a much-anticipated ruling applying the civil penalties provision of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. § 1833a, against a major financial institution, the U. S. District Court for the Southern District of New York may have cemented—at least for now—FIRREA's place as a new favorite Justice Department tool.  In his July 30, 2014 decision, Judge Jed Rakoff—well known for his publicly stated views that the Justice Department and Securities and Exchange Commission are too hesitant in holding financial institutions and their executives accountable for fraudulent practices—imposed a massive, nearly $1.3 billion penalty against Bank of America, and also ordered a former executive to pay a $1 million penalty.

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