Exclusive: SEC official dissented on BNP Paribas waiver

Wed Jul 2, 2014 7:07pm EDT
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By Sarah N. Lynch

WASHINGTON (Reuters) - An official at the U.S. Securities and Exchange Commission broke ranks with other commissioners and voted against granting BNP Paribas a waiver to continue operating several investment advisory units in the United States.

Kara Stein, a Democratic SEC commissioner who has recently demanded more accountability for big banks who break the law, was the sole dissenting vote on Monday on the temporary waiver, according to a document made public this week.

BNP's application was granted the same day that BNP, France's largest bank, pleaded guilty to criminal charges it violated U.S. sanctions and agreed to pay a $9 billion penalty.

The temporary waiver will become permanent, unless an "interested person" in the matter is granted a hearing. The deadline for requesting a hearing is July 25.

The New York state banking regulator, Benjamin Lawsky, on Monday separately decided not to pull BNP's banking license in the state, in spite of its criminal guilty plea, partly because of the risk it could put BNP out of business.

Stein's dissenting vote is part of a larger pushback among some enforcement authorities and lawmakers who have increasingly questioned whether big financial firms are getting off too easily for their misdeeds, especially those who are repeat offenders.

In recent months, financial penalties against banks have soared into the multi-billions of dollars, and authorities are experimenting with unprecedented penalties, such as a temporary ban that was placed on BNP's dollar-clearing operations. A spokeswoman for BNP Paribas declined to comment on the dissenting vote by Stein because the application for a permanent waiver is still pending.

BNP argued in an SEC filling why the waiver should be granted. Regarding its Hawaii-based advisory firm, BNP said it is a "relatively small state" where its 12 employees would experience "great difficulty" finding new jobs. Denying the waiver would force the advisers to end relationships with third-party funds and hurt the expansion of its business, disrupting "highly valued long-term client relationships," the bank said.   Continued...

A BNP Paribas sign is pictured on a building of the bank in Geneva July 1, 2014. REUTERS/Pierre Albouy