Occupy the SEC, an offshoot of the Occupy Wall Street Movement, recently filed suit against several federal regulators as part of an effort to expedite the implementation of the Volcker Rule ban on proprietary trading.
Eric Taylor and Kristine Ekman, the plaintiffs, are members of Occupy the SEC. Taylor, who holds an insured deposit account with JPMorgan Chase, and Ekman, who holds an insured deposit account with Wells Fargo, said that
their deposits are at risk because “banks can continue to speculate with it as long as the Volcker Rule has not been implemented,” reports.
“Plaintiffs suffer the risk of irreparable injury to their deposits by reason of [regulators’] non-action,” the suit against the Federal Reserve, FDIC, SEC, CFTC, OCC and U.S. Treasury said. “The plaintiffs’ bank accounts are subject to potential dissipation or liquidation resulting from bank losses occasioned by excessively risky trading activities by those banks. The Volcker Rule would institute structural safeguards insulating depository accounts from banks’ proprietary trading activities, thereby protecting plaintiffs’ bank accounts. Defendants’ unjustified delay in finalizing the Volcker Rule puts plaintiffs’ bank accounts at continued risk of financial loss.”
The lawsuit marks the first attempt to hasten, rather than delay, implementation of the rule through litigation. Both Taylor and Ekman live in Brooklyn, N.Y., which allowed them to file the case in the Federal District Court for the Eastern District of New York as opposed to the Southern District court that covers the Wall Street area and Lower Manhattan, according to Wall Street on Parade.
Additionally, the complaint noted the $6 billion trading loss taken by JPMorgan last year after it used deposited funds to invest in derivatives, as well as recent reports that the bank bet against its CIO office, “virtually guaranteeing that some division within the bank would suffer losses.”
“While depositor funds at JPMorgan remained intact despite these losses, it is uncertain whether another bank (or even JPMorgan itself) would survive another such fiasco, given the high level of interconnectedness and leveraged risk at most bank trading desks,” the complaint said.
The lawsuit said that after filing a 325-page comment letter in response to the Volcker Rule proposal, the plaintiffs “have exhausted all administrative remedies available.”
“At this stage, plaintiffs are left with no adequate remedy at law,” the lawsuit said. “Only the declaratory, injunctive and mandamus relief that this Court can provide will fully redress the harms to be suffered by plaintiffs.”