Investor Advocates Call for Banking Reform in the Wake of FinCEN SAR Leaks Involving Global Banks

PHILADELPHIA, Sept. 23, 2020 /PRNewswire/ -- The investor right lawyers at the Goldman Scarlato & Penny law firm, who often represent victims of investment fraud against banks that allegedly enabled or assisted such fraud, joined growing calls for banking reform in the wake of leaked documents documenting suspicious activity reports ("SAR") filed by global banks that appear to document instances of investment fraud and money laundering.

"It is outrageous to see prominent banks apparently recognizing the serious misconduct perpetrated through their account by nefarious actors, but nonetheless continuing to work with those actors and allow them to use the banks' infrastructure to commit fraud, according to the leaked FinCEN records and media reports," said Alan Rosca, a Cleveland-based partner at Goldman Scarlato & Penny who represents investors who lost their savings as a result of fraud, in several pending cases against banks and other financial institutions that are accused of enabling such fraud.

Under arcane provisions inserted in the current anti-money laundering rules and regulations, banks are not required to disclose copies of the SARs they filed with regulators, in civil litigation brought against such banks by investors alleging that the banks assisted or enabled the fraud that victimized those investors.

"The current rules enable banks to conceal their role in fraudulent schemes, from investors who fell victim to such schemes and seek to hold those banks liable for their role in the fraud," said attorney Paul Scarlato, a partner at Goldman Scarlato & Penny who represents investors. "The FinCEN leaks have made it clear: the current regulatory system, intended to prevent banks from becoming entangled in fraud and money laundering, does not work. Reform is sorely needed," added Scarlato. "Removing a bank's ability to conceal those SARs from victimized investors in civil litigation will make the bank think twice before allowing a known fraudster to continue to use its accounts to victimize others," said Scarlato.

Banks often argue that increased regulatory burdens would cause them to increase fees on their retail customers, but under the current framework it's the victims of fraud who subsidize those fees with their lost life savings, explained attorney Alan Rosca. "The banking system fundamentally depends on trust, and the titans of the banking industry should ask themselves: how long will the average investor continue to entrust banks with their hard-earned savings when the picture that emerges is one of banks that turn a blind eye on fraud perpetrated through their accounts, even after they become aware of it?" said attorney Rosca, who is also an adjunct professor of securities regulation.

The Goldman Scarlato & Penny investor advocates continue to investigate financial institutions that may knowingly aid and abet fraudsters who victimize investors. They are encouraging investors across the country to reach out to their congresspersons and urge them to press for common-sense, sorely needed reform of the banking industry.

© 2020 Goldman Scarlato & Penny, P.C., investment fraud lawyers. This release may be deemed to include attorney advertising.

Contact: Alan Rosca, (216) 570-0097, [email protected]

SOURCE Goldman Scarlato & Penny, P.C.

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