Regulation

Corporate Impunity

In the early days of the Trump era, there was speculation that the new administration would be tough on corporate crime. Attorney General Jeff Sessions gave a speech in April 2017 in which he vowed that his Justice Department “will continue to investigate and prosecute corporate fraud and misconduct; bribery; public corruption; organized crime; trade-secret theft; money laundering; securities fraud; government fraud; health care fraud; and Internet fraud, among others.’ He added that DOJ has “a responsibility to protect American consumers.”

A new report from Public Citizen and the Corporate Research Project of Good Jobs First called Corporate Impunity shows just how hollow that promise was. Based on data from Violation Tracker, it shows that during the first year of the Trump Administration there was a substantial drop in regulatory enforcement and prosecution of corporate criminal offenses. In contrast to the zero-tolerance attitude toward migrants and refugees, the administration is showing considerable indulgence when it comes to corporate offenders.

In making a comparison to the previous administration, it is worth recalling the mixed record of the Obama years. That administration had a poor record with regard to holding top corporate executives personally responsible for serious offenses such as the abuses leading to the financial meltdown and the Deepwater Horizon oil spill disaster in the Gulf of Mexico. It continued the misguided policy of offering corporate miscreants deferred-prosecution and non-prosecution agreements.

Yet at least the Obama Administration took steps to increase the financial penalties levied on corporations for their misdeeds. For the first time, billion-dollar fines and settlements became a common occurrence.

Corporate Impunity judges the Trump Administration by that same measure—the level of monetary penalties imposed on companies. It finds, for example, that such penalties imposed by the Trump DOJ in its first year were less than one-tenth the level in each of the last two years of Obama.

The report limits its analysis of regulatory agencies to those which were headed by a Trump appointee for most of 2017. Of the 12 agencies examined, ten showed a decline in the number of enforcement actions. In some cases, those drops were steep. The Federal Trade Commission and the Securities and Exchange Commission had decreases of more than 40 percent, and five others dropped more than 25 percent.

For some agencies, the decline in the number of cases was much less severe than the drop in penalty amounts. At the Environmental Protection Agency, for example, the caseload in Trump’s first year was down 12 percent while the penalty total plunged more than 90 percent.

The results for Trump’s second year are likely to be even more dismal once results are tabulated for agencies such as the Consumer Financial Protection Bureau, which racked up an impressive record during the Obama years and attempted to do the same under Trump until the agency was captured in late 2017 by the White House and subsequently neutered.

Trump’s enforcement record shows that he really is a populist—a corporate populist creating a society in which large companies reign supreme and in many ways are above the law.

Deep Corporate Conspiracy

Donald Trump and the rightwing fringe never tire of talking about supposed deep state plots. Yet if there is any conspiracy going on, it is the seeming attempt to remove any checks on the power of large corporations.

The latest evidence of this effort can be seen at the banking regulatory agencies and the Supreme Court. Only a decade after a financial crisis brought on by the excesses of the financial sector, the agencies are moving to eliminate the Dodd-Frank restriction on speculative trading practices by the large banks. The attack on the Volcker Rule ignores not only the role such practices played in the meltdown but the fact that the banks have been doing quite well despite the limitation. Last year JPMorgan Chase, for example, posted a profit of more than $24 billion.

Yet even more infuriating is seeing the Supreme Court justice nominated by a purported populist president cast the deciding vote and write the opinion in a ruling that will cripple the ability of workers to use the courts to address abusive employment practices.

The opinion by Justice Gorsuch in the Epic Systems case turns the clock back to a time of near total employer tyranny in the workplace by allowing corporations to mandate that disputes be resolved through the secretive and one-sided process of arbitration rather than class action lawsuits.

The ruling had a special significance for me, given that I have spent the past year doing extensive research about such lawsuits; specifically, wage and hour collective actions designed to combat off-the-clock work, denial of overtime compensation and other forms of wage theft. My colleagues and I will publish a report on the research next week, so I cannot provide the details now. Suffice it to say that the report is going to show that wage theft is a lot more pervasive in big business than is commonly understood.

When I began the research I thought I was documenting legal actions that would continue to be a key tool for addressing employment abuses. Now it may turn out that the report will be mainly of historical interest, describing the way large corporations used to be compelled to pay out substantial sums to compensate workers cheated out of their proper pay.

To make matters worse, the Supreme Court is expected to land another blow against the collective power of workers in its forthcoming ruling in the Janus case concerning public employee unions.

The weakening of regulation, class action litigation and unions provides an unprecedented boost in the ability of big business to call the shots in the workplace and in communities. The massive increase in profitability generated by the Republican tax bill makes large corporations even more mighty.

While this power grab is taking place, many corporations are trying to present themselves as part of the more enlightened sector of society. Walt Disney and Starbucks, for instance, want us to believe they are the anti-racist vanguard. This doesn’t always work: Wells Fargo, Volkswagen and Facebook face an uphill battle. Yet all too many firms have succeeded in projecting a benign image while engaging in corrupt behavior.

There is no easy way to remedy this situation, but we should not let the distractions emanating from the White House make us forget the larger problems.

Profits Before Safety

The passengers who survived Southwest Flight 1380’s engine explosion are feeling lucky to be alive and grateful for the skilled landing executed by pilot Tammie Jo Shults. Another group feeling relief are the top executives of Allegiant Air. If the accident had happened to one of their planes, the carrier’s survival might be in question.

That’s because of the revelations contained in a remarkable 60 Minutes investigative report on Allegiant that aired on April 15^th. Correspondent Steve Kroft described the culture of the budget carrier as one that puts profits before safety and that discourages pilots from reporting mechanical problems with their aircraft. The piece documented an alarming pattern of aborted takeoffs, cabin pressure loss, emergency descents and unscheduled landings during Allegiant flights.

In one incident Allegiant, whose executives refused to be interviewed by 60 Minutes, fired a pilot who made an emergency landing when smoke appeared in the cabin and then ordered passengers to exit rapidly through escape chutes once the plane was on the ground.

To its credit, 60 Minutes did not focus only on Allegiant. It also investigated why a carrier with such a checkered track record was still allowed to fly. The answer turned out to be that the Federal Aviation Administration has during the past few years adopted a less confrontational enforcement approach.

Kroft grilled John Duncan, the FAA’s head of flight standards, who went through extraordinary verbal contortions to avoid saying anything negative about Allegiant’s record. Duncan insisted that each incident was addressed separately and refused to acknowledge there was any pattern of misconduct. Duncan is a living embodiment of that new FAA approach, which involves quietly cooperating with carriers to fix problems rather than pressuring them with large fines and other public sanctions.

The FAA has not abandoned monetary penalties entirely. In Violation Tracker, Allegiant has eight entries from the agency, the largest being a $175,000 fine from 2015 for drug testing deficiencies. Penalties like that are fine for routine infractions, but something a lot more punitive is needed when a company has the kind of dismal record attributed to Allegiant.

Higher fines are just part of what is needed at the FAA. The agency should return to an adversarial posture and compel rogue carriers such as Allegiant to take safety issues seriously.

It won’t be easy for the FAA to change its course, since the Trump Administration and Congressional Republicans are on a crusade against just about every kind of regulation. The latest maneuver is the use of the Congressional Review Act, an obscure law employed last year to undo rules adopted by the Obama Administration during the prior 12 months, to eliminate a longer-standing one: the 2013 Consumer Financial Protection Bureau regulation barring auto lenders from charging minority customers higher interest rates.

This obsession with dismantling the so-called administrative state has gone beyond all justification and is putting the population more and more at the mercy of unscrupulous companies.

A Nirvana for Rogue Corporations

The SEC’s enforcement action against Theranos Inc. and its founder Elizabeth Holmes puts a new focus on the persistence of corporate crime in the healthcare sector after a period in which the business culprits getting the most attention were banks such as Wells Fargo and automotive companies such as Volkswagen and Takata.

Another reminder of the checkered history of health companies comes in a new report from Public Citizen on the trend in legal penalties imposed on pharmaceutical firms. The study, an update of three previous analyses on the subject done by the group, documents a disturbing trend: Although there is no reason to think that egregious drug company misbehavior has disappeared, aggregate criminal penalties against those firms have plunged.

Public Citizen finds that criminal penalties in 2016-2017 were just $317 million, down 88 percent from four years earlier. Combined federal criminal and civil penalties over the same period of time declined from $8.7 billion to $2.8 billion, a drop of more than two-thirds.

At the heart of this trend, the report finds, is a falloff in penalties from settlements of cases involving the unlawful promotion of prescription drugs. Those penalties are down by 94 percent from their peak in 2012-2013.

It is probably true that Big Pharma has toned down the brazen behavior that led to giant penalties such as the $3 billion imposed on GlaxoSmithKline, the $2.3 billion imposed on Pfizer, the $2.2 billion imposed on Johnson & Johnson, the $1.5 billion imposed on Abbott Laboratories, the $1.4 billion imposed on Eli Lilly, the $950 million imposed on Merck, etc.

One problem that has by no means disappeared is the improper distribution of opioids. Although Purdue Pharma was penalized $461 million in 2007 and various wholesalers and pharmacy chains have been hit with smaller fines since then, there is no indication that the misconduct is receding.

Part of the problem is that the president of the United States has directed little criticism against the drug industry while making inflammatory statements about illicit traffickers, including the suggestion of imposing the death penalty. He has also expressed his admiration for the extra-judicial executions of drug dealers in the Philippines.

The decline in drug industry fines is part of a larger tendency by the Trump Administration to scale back penalties against corporations in all industries. As I previously noted, the latest update to Violation Tracker through the end of Trump’s first 12 months shows a remarkable drop in penalties, especially for the very largest companies in the Fortune 100.

This can be seen as a form of stealth deregulation. Increasingly, Big Pharma and other industries benefit both from rolled-back rulemaking and from diminished financial consequences if they break the rules still on the books. It is truly a nirvana for rogue corporations.

The Other Problem Banks

Bipartisanship has returned to Washington, thanks to the overwhelming desire of Republicans and quite a few Democrats to roll back portions of the Dodd-Frank Act. Ten years after the onset of the financial meltdown and seven years after the law went into effect, the relentless efforts of the banking lobby seem to be paying off.

The legislation, S.2155, is being sold as much needed relief for smaller banks that were supposedly treated unfairly by Dodd-Frank. Some adjustment to the law might make sense for very small banks, but the bill has evolved into something that will benefit larger institutions that still merit close scrutiny.

Using relief for community banks as a stalking horse, proponents of the bill have added provisions that will reduce the degree of supervision that would be exercised on banks with assets up to $250 billion. Those with assets between $50 billion and $100 billion would benefit the most.

The two dozen banks (listed in a Congressional Research Service report) that would be affected by these provisions are hardly mom and pop financial institutions. And while the most harm to the economy was done by the likes of Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, these mid-sized banks have records that are far from spotless.

Take the case of Credit Suisse, the Swiss bank whose U.S. operation has assets of about $215 billion. During the final days of the Obama Administration it had to pay $5.3 billion to settle a case involving the sale of toxic securities a decade ago. In 2014 it paid $1.8 billion in connection with criminal charges of helping U.S. taxpayers file false returns. In 2009 it paid $268 million to settle criminal allegations relating to economic sanctions. In all, Credit Suisse has more than $9 billion documented in Violation Tracker, ranking it tenth among all corporations.

Or consider Barclays, the British bank whose U.S. operation has assets of about $180 billion. In 2015 it pled guilty to criminal charges of conspiring to manipulate foreign exchange markets and was fined $710 million while also paying $400 million to settle related civil allegations. That same year it had to pay $325 million to settle a case brought by the National Credit Union Administration concerning Barclay’s sale of toxic securities a decade earlier. Its Violation Tracker total is more than $3 billion, putting it in nineteenth place among all corporations.

Other controversial foreign banks whose U.S. subsidiaries would benefit from S.2155 relaxed regulation include Deutsche Bank ($12 billion in Violation Tracker), BNP Paribas ($9 billion) and UBS ($5 billion).

Foreign banks are not the only bad actors on the list. Atlanta-based SunTrust, with about $200 billion in assets, has racked up more than $1.5 billion in penalties, including one case in which it had to provide $500 million in relief to underwater borrowers to resolve allegations that it engaged in deceptive and illegal mortgage servicing practices. Among the other items in its rap sheet is a $21 million payment to resolve allegations that it charged higher loan rates to black and Latino borrowers.

The S.2155 beneficiary list includes half a dozen additional domestic banks with $100 million or more in penalties: Ally Financial, American Express, Discover Financial Services, Fifth Third Bancorp, M&T Bank Corporation, and Regions Financial Corporation.

A bank does not have to be gigantic to be problematic. These culprits should not lumped together with community banks in deciding whether to tinker with Dodd-Frank.

Big Polluters and Big Penalties

At a moment when there is all too much talk in Washington about deregulation, a helpful counterpoint has arrived from the Political Economy Research Institute in the form of the latest edition of the Toxic 100, a compilation of the companies responsible for the highest volumes of industrial pollution.

The project, which has been providing this information since 2004, now has rankings on three kinds of pollution: air, water and greenhouse gases. The lists include environmental justice indicators that highlight the disproportionate effect on low-income and minority communities.

The companies on these lists represent some of the biggest threats to the physical well-being of the people of the United States.

The top tier of the air pollution list, which is based on data from the EPA’s Toxics Release Inventory, contains the kind of industrial giants one might expect: DowDuPont, General Electric, Royal Dutch Shell and Arconic (a spinoff of Alcoa). Yet number one is the less well known Zachry Group, an engineering company that operates dirty manufacturing facilities in North Carolina and Texas. Also in the top ten is Berkshire Hathaway by virtue of its ownership of companies such as Johns Manville, Pacificorp and MidAmerican Energy.

The top tier of the greenhouse gas list, based on other EPA data, is dominated by companies operating lots of fossil fuel power plants: Southern Company, Duke Energy, American Electric Power and NRG Energy. These are the companies Trump is aiding with his attack on the Obama Administration’s Clean Power Plan.

Berkshire Hathaway is the only parent company in the top ten on both the air and greenhouse gas lists; it ranks 21^st in water pollution.

I could not resist the temptation to check where the companies that rank high on the Toxic 100 lists show up in Violation Tracker. This is partly because Rich Puchalsky, who serves as the data management specialist for the Toxic 100, has also played an essential role in the construction and expansion of Violation Tracker.

Rich kindly created for me a spreadsheet combining rankings from the two projects. Looking first at the Toxic Air 100, I see there are unsurprising overlaps with the 100 most penalized companies in Violation Tracker—BP, Exxon Mobil, Royal Dutch Shell, Phillips 66, etc. Yet there are some very large air polluters that have faced much smaller penalties, including the Zachry Group cited above and TMS International, a steel industry service company. The EPA should take note.

As for the Greenhouse 100, there are expected overlaps with the Violation Tracker top 100—such as Duke Energy, American Electric Power, FirstEnergy, etc. But there are some discrepancies. Large CO2 emitters such as Energy Future Holdings, Great Plains Energy, and OGE Energy have not received substantial penalties. The EPA might want to check these as well.

Beyond the specifics of individual companies, there is a broader issue here: what is the connection between fines and emissions? Although the releases reported in the Toxic 100 are technically not illegal, those companies are likely to be creating unsanctioned emissions as well. Fines could bring about reductions in both categories. Yet many big polluters treat the penalties as a tolerable cost of doing business and fail to do enough to clean up their facilities. That suggests the need for newer and more effective forms of enforcement. Deregulation is not one of them.

The Gun Industry’s Missing Penalties

Violation Tracker collects data on enforcement activity by more than 40 federal regulatory agencies and the Justice Department. Missing from the list is the Bureau of Alcohol, Tobacco, Firearms and Explosives.

The database provides penalty totals for about 50 major industry groups. High on the list are controversial industries frequently involved in misconduct: banks, oil companies, pharmaceutical producers and the like. Missing from the list is the gun industry.

The ATF and the gun manufacturers are not being deliberately excluded from the database. The problem is that, unlike other federal agencies claiming to be involved in industry oversight, ATF has surprisingly little to report on its efforts. I’ve searched the ATF web pages thoroughly and cannot find the kind of information typically found on other agency sites on proceedings against companies for regulatory infractions. I’ve also searched the archive of the Government Accountability Office for reports about the agency’s enforcement actions against gun makers and gun sellers, to no avail.

ATF’s website has a statistical report on the gun industry and a list of rulings that appear to deal with general policy issues, including licensing, rather than individual company behavior. There is also a page pointing to the relevant provisions of the Code of Federal Regulations but the word “enforcement” hardly appears on the website, except for references to the law enforcement community.

The light touch of the federal government is also reflected in the SEC filings of publicly traded gun manufacturers. For example, the recently published 10-K annual report of Sturm, Ruger & Company has one perfunctory reference to ATF and gives the impression the agency is not much of a concern.

Gun manufacturers are, of course, subject to broad federal regulation covering all industries. Companies such as American Outdoors Brands (parent of Smith & Wesson), Beretta and Colt’s Manufacturing as well as Sturm, Ruger appear in Violation Tracker in connection with the penalties that have been imposed on them by agencies such as the EPA and OSHA. Smith & Wesson has an entry relating to a $2 million penalty imposed by the SEC for violating the Foreign Corrupt Practices Act. American Outdoor Brands and Sturm, Ruger have been penalized by the Commerce Department’s Bureau of Industry and Security for export violations.

Yet, aside from licensing requirements, the gun business is lacking significant industry-specific oversight relating to issues such as safety like that exercised by agencies such as the Food and Drug Administration or the Federal Railroad Administration. Special legislation has provided extraordinary protection to an industry whose products are so lethal.

The reality has just come to light in connection with President Trump’s statement that he ordered Attorney General Sessions to get ATF to find a way to restrict the bump stock accessory that allows semi-automatic weapons to function like illegal machine guns. But it appears ATF may not have the authority to take such action.

In truth, the ATF is a licensing body but not really an enforcement agency. The gun industry is essentially unregulated, and the National Rifle Association continues doing everything in its power to keep it that way.

Trump Goes Easy on Major Corporate Offenders

It’s unclear to what extent the Obama Administration’s practice of extracting unprecedented monetary penalties on miscreant companies proved to be an effective deterrent, but at least the billion-dollar fines and settlements served to highlight the ongoing problem of corporate crime.

The Trump Administration seems to be a lot less interested in cracking down on the most egregious corporate offenders. Although the enforcement arms of agencies such as OSHA and EPA are still operating along normal lines, there has been a sharp decline in the number of mega-penalty cases announced by the Justice Department.

This conclusion emerges from an analysis of the data recently added to the Violation Tracker database covering cases through the end of the Trump Administration’s first year in office on January 19.

Since the largest penalties are normally imposed on the largest corporations, I did an analysis focusing on the Fortune 100 list of the very largest U.S. publicly traded companies. I found that overall federal penalties imposed on these firms during Trump’s first 12 months totaled $1.1 billion, compared to an annual average of more than $17 billion during the Obama years.

The Obama totals, of course, reflected extraordinary settlements with the largest banks to resolve allegations relating to their role in bringing about the financial meltdown of a decade ago. These included, for example, the $16 billion settlement with Bank of America in 2014 and the $13 billion settlement with JPMorgan Chase the year before.

Those financial services sector settlements peaked during the middle years of the Obama era. Yet Trump’s $1.1 billion first-year total is still far below the annual average of more than $9 billion for the Fortune 100 during Obama’s final two years in office. It also trails behind the $3 billion total during Obama’s first year.

Looking at all corporate offenders, there were 44 cases with penalties of $1 billion or more during the Obama era yet only two during Trump’s first year, and he doesn’t really deserve credit for those. One is the $5.5 billion settlement reached by the Federal Housing Finance Agency with the Royal Bank of Scotland relating to the sale of toxic securities to Fannie Mae and Freddie Mac. That case had been filed in 2008, and the settlement had been negotiated under Obama. The other is the a $1.4 billion penalty against Volkswagen for its emissions cheating that appears in EPA records with a date of May 17, 2017 but was actually part of a larger $4.3 billion settlement announced by the Justice Department during the last days of the Obama Administration.

There is also an interesting pattern among Trump Administration penalties in the next tier down—those of $100 million or more. The parent companies involved in about two-thirds of these cases are foreign, especially those with the largest penalty totals. They include the Chinese telecom company ZTE, which was penalized for export control violations, and the Swedish telecom Telia, which was punished under the Foreign Corrupt Practices Act.

It appears that the Trump Administration is more likely to get tough with a corporate violator if the company is not based in the United States, while domestic companies get treated more leniently. I guess the slogan is: Make Domestic Corporate Criminals Great Again.

Note: you can do analyses of your own on Violation Tracker using our new feature allowing search results to be filtered by presidential administration.

Stopping the Growth of Rogue Corporations

The federal response to corporate misconduct over the past two decades has alternated between tougher monetary penalties and the promotion of voluntary measures to lure companies into behaving better. Neither has worked very well.

Companies came to saw the increased fines as a tolerable cost of doing business (especially when they were tax deductible), while voluntarism was never a match for corporate greed.

It was thus intriguing when the Federal Reserve recently adopted a new approach in dealing with Wells Fargo. That bank, of course, has become notorious for its brazen scheme of creating millions of accounts not requested by customers, in order to generate illicit fees. It paid a fine of $100 million, with a lot more expected to follow. This came after a series of other scandals, including mortgage abuses that resulted in a $5.3 billion settlement in 2012.

The Fed, on Chair Janet Yellen’s final working day in office, issued an unusually blunt press release saying that the board was taking steps in response to “widespread consumer abuses and other compliance breakdowns” at Wells.

In an unprecedented step, the Fed imposed a restriction on the bank’s ability to grow “until it sufficiently improves its governance and controls.” In an industry for which getting larger is the guiding principle, Wells will feel intense pressure to satisfy the Fed’s demands. In fact, concurrently with the Fed’s action Wells announced that it would replace one-quarter of its 16-person board of directors by the end of the year.

Bank-friendly politicians have not had much to say about the Fed’s action, but it is clear that the restriction placed on Wells represents a forceful rebuttal to those pressing for a weakening of financial industry regulation. The ouster of Yellen by President Trump was a coup for the deregulation crowd, but we can take some solace in reports that her successor Jerome Powell oversaw the Fed’s negotiations with Wells.

The Fed’s action should be promoted as an example of how regulatory agencies and the Justice Department need to get more creative in dealing with egregious and repeat violators. Rogue corporations will only change their behavior if the penalties really sting.

The restriction on growth begins to meet this requirement because it makes Wells more vulnerable. An inability to become larger through acquisitions means that the bank will lose ground to its big competitors. Wells is probably too big to be a potential takeover target itself, but it could come under pressure from activist investors to restructure or even sell off portions of itself.

Moreover, the restrictions will probably depress the bank’s stock price, and that will be felt personally by the executives who encouraged or overlooked the misconduct.

At the same time, the house-cleaning among directors is an important message to send to board members at other misbehaving companies. That message would be even more effective if directors are not just removed but held personally liable for allowing the corrupt practices to happen.

The Fed has not always been the most aggressive of regulators. Let’s hope its action on Wells inspires other agencies to get tougher with corporate miscreants.

The 2017 Corporate Rap Sheet

The year began with a burst of announcements by the Obama Administration of cases it rushed to resolve before leaving office. In the period between election day and the inauguration, the Justice Department and various agencies announced more than $30 billion in fines and settlements.

That flurry of activity disappeared once Donald Trump took office. Agency enforcement activity soon resumed, thanks to the efforts of career officials, but it appears that the volume of cases has declined compared to previous years. The same goes for the Justice Department, where high-profile prosecutions of large companies have continued but have become less frequent. Here is a rundown of selected major cases resolved during 2017, divided between the two administrations:

Obama Cases

Sale of Toxic Securities: Two of the year’s biggest penalties came in cases stemming back to the period leading up to the financial meltdown in 2008. During its final days the Obama Justice Department got Deutsche Bank to agree to pay $7.2 billion to resolve allegations that it misled investors in the sale of mortgage-backed securities. A day later it announced that Credit Suisse would pay $5.3 billion in a similar case. Moody’s reached an $864 million settlement with the federal government and 21 states for providing flawed credit ratings on what turned out to be toxic securities.

Money Laundering. In January Western Union agreed to forfeit $586 million and entered into agreements with the Justice Department and the Federal Trade Commission to resolve criminal allegations that it failed to maintain an effective anti-money-laundering system and that it abetted wire fraud.

Environmental Fraud: In January the Justice Department announced that Volkswagen would plead guilty to three felony counts and pay a $2.8 billion penalty to resolve the criminal charges brought against the automaker in connection with its scheme to use a device to cheat on emissions tests.

Auto Safety Fraud: In January Takata Corporation agreed to pay a $1 billion criminal penalty in the case brought against the Japanese company for fraudulent conduct in the sale of defective airbag inflators.

Trump Cases

Sale of Toxic Securities: In July the Federal Housing Finance Agency announced that Royal Bank of Scotland would pay $5.5 billion to settle allegations relating to the sale of mortgage-backed securities to Fannie Mae and Freddie Mac.

Export Control Violations: In March the Commerce Department’s Bureau of Industry and Security announced that the Chinese company ZTE would pay $661 million to resolve allegations that it shipped telecommunications equipment to Iran and North Korea in violation of U.S. export restrictions.

Bribery: In September the Swedish telecommunications company Telia was fined $457 million by the Securities and Exchange Commission for violating the Foreign Corrupt Practices Act through illicit payments to government officials in Uzbekistan.

False Claims Act: In August the pharmaceutical company Mylan agreed to pay $465 million to settle allegations that it misclassified its EpiPen devices as generic drugs to avoid paying rebates to Medicaid.

Illegal Drug Promotion/Distribution: In July the U.S. Attorney’s Office in Los Angeles announced that Celgene would pay $280 million to settle allegations that it illegally promoted two cancer medications for uses not approved by the Food and Drug Administration. In September AmeriSourceBergen pled guilty and agreed to pay a total of $260 million to resolve criminal liability for its distribution of oncology supportive-care drugs from a facility that was not registered with the FDA.

Foreign Exchange Violations: In July the Federal Reserve Board fined the French bank BNP Paribas $246 million for failing to prevent its foreign exchange traders from engaging in market manipulation. In September the Fed fined HSBC $175 million for the firm’s unsafe and unsound practices in its foreign exchange trading business.

Consumer Protection: In August the Consumer Financial Protection Bureau fined American Express $96 million for discriminating against consumers in Puerto Rico, the U.S. Virgin Islands, and other U.S. territories by providing them with credit and charge card terms that were inferior to those available in the 50 states.

Price-Fixing: In May the Justice Department’s Antitrust Division announced that Bumble Bee Foods would pay a criminal fine of $25 million in connection with price-fixing of shelf-stable tuna.

Workplace Harassment: In August the Equal Employment Opportunity Commission announced that Ford Motor would pay up to $10.125 million to workers affected by sexual and racial harassment at two company facilities in the Chicago area.

Fair Labor Standards Act: In March the Labor Department’s Wage and Hour Division announced that the Walt Disney Company would pay $3.8 million in back wages to workers affected by violations of minimum wage and overtime rules.

Environmental Violation: In October Exxon Mobil agreed to pay a penalty of $2.5 million and spend $300 million on air pollution controls to resolve allegations that it violated the Clean Air Act by failing to properly operate and monitor industrial flares at its petrochemical facilities.

Note: Additional details on all these cases can be found in Violation Tracker. During 2017 my colleagues and I expanded the database to 300,000 entries with total penalties of $400 billion. Coverage now includes cases from more than 40 federal regulatory agencies and all divisions of the Justice Department dating back to the beginning of 2000.