Fraud litigation expert William Black said during a recent panel discussion that fraudulent accounting is a prevalent practice among some of the nation’s “most reputable” banks, adding that regulators do not want to acknowledge the problem.
“People who wear nice suits and sit in the CEO’s office can be…criminals,” Black, an associate professor at the University of Missouri-Kansas City and the former head of the Institute for Fraud Prevention, said during the discussion at Columbia Law School.
Black was one of a number of participants in the discussion of fraud and the challenges of financial reform. Other participants included Michael Norman, an economist and private trader, as well as Lynn E. Turner, a forensic accounting expert and former chief accountant for the SEC. The discussion was moderated by Harvey J. Goldschmid, a Dwight law professor at Columbia Law School.
Black said regulators are responsible for bringing potential criminal referrals to the attention of the Justice Department, which could decide to initiate an investigation and possibly file charges.
Turner, the managing director of litigation consulting firm LitiNomics, said that Dodd-Frank must be fully implemented, adding that the 1933 Glass-Steagall Act repealed in 1999 should be re-implemented. He also said, however, that even if Glass-Steagall was reinstituted, the risk-taking behavior of executives and directors would continue.