Is Time Running Out on Criminal Prosecutions Against Wall Street ?


Federal prosecutors may be about to run out of time to file criminal charges against Wall Street participants for their role in the financial crisis. Charges for most federal offenses, including securities fraud, must be filed within five years of the offense, experts say. The subprime lending that played a significant role in the crisis reached its peak about five years ago ? in 2007. Thus, the statute of limitations is already likely to be an issue in cases that prosecutors may file, if any.

Tolling agreements may offer a solution to time bar problems, if the authorities are interested in pursuing them. In a tolling agreement, the target of a legal action agrees that the time bar clock will stop ticking on (thus preserving) any claims that exist as of the date of the agreement. Potential defendants are often willing to go that route because it delays the filing of charges and the commencement of a legal action against them. Most people would rather agree to limit their statute of limitations defense in this way than be indicted the next day (“Going after Wall Street ? and watching the clock,” CNNMoney).

Other possible solutions may exist, if the government is interested. Experts say that mail and wire fraud may apply to cases involving mortgage-backed securities, and they have 10-year statutes of limitation that may extend the filing deadline to 2016 or later.

State attorneys general may consider filing state law charges that may have longer statutes of limitation, the article suggests.

The larger question is whether the authorities think they can get convictions and/or have the will to pursue these matters at all. The paucity of criminal actions against Wall Street actors suggests that the answers to these questions are no.

Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.