The Other Face of EU Business Regulation

There is a common assumption in some circles that Europe is a regulatory nightmare for business. Resentment toward Brussels bureaucrats was a prime motivating factor for Brexit, and today U.S. high tech firms complain about being pressured over antitrust and data protection issues. Claims about regulatory overreach are part of the MAGA distaste for all things European.

A report I just published with my colleagues at Good Jobs First challenges this depiction of EU practices. Entitled Europe’s Biggest Corporate Lawbreakers at Home and Abroad, the report draws on data collected for Violation Tracker Global to show that in many ways EU regulatory enforcement lags behind other countries, especially the United States.

We found that large multinational corporations based in the European Union have been paying far more in regulatory penalties outside the EU than inside. Since the beginning of 2010, EU companies have paid the equivalent of US$43 billion (about EUR 37 billion) in fines and settlements in cases brought by the European Commission and member-state regulators. This is less than half of the US$104 billion (EUR 91 billion) those companies paid in the rest of the world.

Among the 445 EU corporations included in the analysis, the average company paid $95 million in total penalties for cases brought in the EU, far less than the average of $234 million per company for cases brought elsewhere. Volkswagen, the European company with the most worldwide penalties, paid only $5.7 billion of its $30.3 billion total in the EU.

When the penalties of the EU-based parent companies are looked at by industry, the largest total by far comes from the financial services sector. Of the $58 billion in penalties paid by EU-based financial services corporations worldwide, only 12% involved cases brought by regulators in the EU. Deutsche Bank, the most penalized European bank paid only $1.1 billion of its $16.7 billion total in the EU.

When the penalties of the EU parents are analyzed according to the category of the offense, financial offenses are at the top, with a total of $50 billion. Only 11% of this amount came from cases in the EU.

By contrast, 63% of the $47 billion the companies paid in penalties for competition-related offenses came from cases brought either by the European Commission’s Directorate-General for Competition or authorities in member states. European regulators also account for most of the penalties paid by EU companies for data protection offenses.

The United States accounts for two-thirds of the total penalties paid by companies headquartered in the EU. Six of the 10 most penalized EU companies in the U.S.—including Allianz, BNP Paribas, and Deutsche Bank–have paid over 90% of their total fines and settlements to U.S. regulators and prosecutors.

In short, there are two faces of EU regulation: In the areas of competition and privacy there is aggressive enforcement with numerous high-profile cases against large corporations with substantial penalties. In other categories, there are far fewer major cases. As a result, large EU-based corporations are facing much lighter overall penalties closer to home than they face abroad, especially in the United States.

This reality is largely being ignored by EU policymakers, increasing numbers of whom are being swayed by the anti-regulatory zealots. Last year, the EU adopted the Corporate Sustainability Due Diligence Directive, which established more rigorous disclosure requirements about human rights and environmental practices in corporate operations and supply chains.

This year, the EU is backtracking. It adopted an Omnibus package that weakens the reporting rules and limits the number of companies that need to comply. Our report argues that this reversal is a mistake and argues in favor of more robust disclosure and enforcement.

A Company’s MAGA-Style Attack on a Regulatory Agency

Normally, when a company reaches a settlement with a regulatory agency, that is the end of the matter. Gemini Trust, a cryptocurrency exchange, has another idea.

In January, Gemini agreed to pay a $5 million fine to resolve a case brought by the Commodity Futures Trading Commission alleging the company made false statements during an investigation relating to its exchange and futures contracts. Gemini neither admitted nor denied the misconduct.

Now Gemini is attacking the CFTC by filing a pugnacious complaint with the agency’s inspector general. The 13-page document alleges that the CFTC’s Enforcement Division is “out of control and that its culture is toxic.” It claims that agency staffers were “not motivated by a principled application of the law or desire to protect the commodities markets. Rather, these lawyers were driven by a selfish desire to advance their careers by misusing their offices to obtain a high-profile ‘win.’”

Gemini’s complaint criticizes by name the lead CFTC lawyer on the case, who is accused of making false statements about the matter in the bio posted on the website of the law firm he joined after leaving the agency.

The facts of the Gemini case are complicated. I will not attempt to summarize them or assess the validity of the CFTC’s case.

What concerns me is whether Gemini’s move is a sign of things to come as companies feel emboldened by the anti-regulatory rhetoric of the Trump Administration to assail regulators in unprecedented ways. The Gemini complaint incorporates MAGA-style rhetoric by accusing the CFTC of seeking to “weaponize and tilt the scales of justice in its favor” and engaging in “trophy-hunting lawfare.”

It is worth noting that the CFTC case is not the only time Gemini, which was founded by the Winklevoss brothers, known for their legal disputes with Mark Zuckerberg, has run afoul of regulators.

Last year, in a settlement with the New York Department of Financial Services, Gemini agreed to return at least $1.1 billion to customers and pay a $37 million fine to resolve allegations it failed to conduct due diligence on Genesis Global Capital, an unregulated third party that allowed Gemini customers to loan their virtual currency and receive interest payments. Genesis defaulted on its loans and declared bankruptcy in 2023.

Also last year, Gemini agreed to pay $50 million to resolve allegations it misled thousands of investors on the risks associated with one of its investment programs.

Given the way the Trump Administration and Congressional Republicans are boosting cryptocurrency, it is not surprising that a company such as Gemini would feel confident in going after one of the main agencies involved in oversight of the business.

It is unclear what Gemini expects to accomplish with its complaint. The CFTC has already been weakened by the departure of many staff members since the new administration took office. The man Trump has nominated to head the agency is Brian Quintenz, who served as a commissioner during the first Trump administration and who has close ties to the cryptocurrency industry. On his X social media page he describes himself as a “financial freedom advocate.” An analysis published in the National Law Review said that his nomination “portends a potential shift towards a more business-friendly regulatory approach.”

Perhaps Gemini is paving the way for Quintenz, who would initially run the commission single-handledly, to rescind the settlement and return the $5 million. This would be another unfortunate step in the Trump Administration’s effort to rewrite the history of enforcement at the same time that it undermines its future.

The MAGA Makeover of the FCPA

The Trump Administration jumped at the opportunity to lash out at anti-deportation protesters, but for corporate criminals it continues to take a much more lenient position. In the latest in a series of steps that soften enforcement against business targets, the Justice Department just announced its new approach to prosecutions under the Foreign Corrupt Practices Act.

The policy was announced by Deputy Attorney General Todd Blanche, who previously represented Donald Trump in the New York State hush money case in which Trump was found guilty of 34 counts of falsifying business records.

Not long after taking office, Trump signed an executive order that paused all FCPA prosecutions, claiming that the law, enacted in 1977 in response to a series of foreign bribery scandals linked to Watergate, is detrimental to the competitiveness of U.S. corporations.

Blanche’s memo embraces that dubious argument by stating that FCPA cases should not put “undue burdens on American companies that operate abroad.” It also gives priority to investigations that could enhance overseas business opportunities for U.S. corporations or advance U.S. national security. This is effectively turning the FCPA, which was intended to promote honesty in business transactions, into an economic weapon against foreign competitors.

At the same time, Blanche’s policy is intended to weaken the FCPA in three ways. First, the memo directs prosecutors to give priority to cases involving transnational criminal organizations such as drug cartels. The typical FCPA case involves illegal payments by a corporate executive or agent to secure a procurement contract from a foreign government. Drug cartels do not compete for procurement contracts. Blanche’s policy seems like a way to divert resources from cases against corporations.

Second, the policy memo calls on prosecutors to “focus on cases in which individuals have engaged in criminal misconduct and not attribute nonspecific malfeasance to corporate structures.” This ignores the fact that individuals paying bribes are doing so in the interest of their employer and often with their knowledge. Blanche’s policy could enable companies to put the blame on a mid-level officials and escape consequences for both C-Suite executives and the corporation itself.

Violation Tracker documents more than 300 records dating back to 2000 in which corporations paid fines or reached settlements in FCPA cases. If Blanche’s policy had been in effect, most of those companies would have escaped punishment.

A third way in which the Blanche doctrine weakens enforcement is by directing prosecutors to take into account “collateral consequences, such as the potential disruption to lawful business and the impact on a company’s employees, throughout an investigation, not only at the resolution phase.”

This is another red herring. FCPA cases are typically brought against large companies that are easily able to deal with an investigation and the payment of penalties. The median penalty paid by companies in those cases documented in Violation Tracker is only $14 million. There were a handful of very large penalties against corporations such as Goldman Sachs, but there is no indication that the survival of those firms was put into question.

The enactment of the FCPA was a watershed moment in the campaign to promote corporate integrity. Trump’s Justice Department is both weakening its use against domestic corporations and weaponizing it against foreign companies to promote America First policies.

Removing the Wrong Shackles

Over the past decade, Wells Fargo has been a poster child for corporate greed and misconduct. In 2016 the Consumer Financial Protection Bureau revealed that the bank had been ordering its employees to create unauthorized accounts for existing customers in order to generate illegitimate fees.

The CFPB fined Wells Fargo $100 million in what would be the first in a series of enforcement actions and lawsuits that have cost the bank more than $8 billion in penalties for the bogus accounts and other offenses such as improper foreclosures and overdraft fees. Along with those monetary punishments, in 2018 the Federal Reserve took the unusual step of putting a limit on the bank’s ability to increase its assets until it improved its governance and internal controls.

Now, in 2025, the CFPB has effectively been dismantled by the Trump Administration’s anti-regulatory steamroller, while the Fed just announced it is removing the asset limit. According to the bank regulator, “the removal of the growth restriction reflects the substantial progress the bank has made in addressing its deficiencies.”

There are two ways to view this decision. On the one hand, the Fed demonstrated that a penalty other than a fine can be quite effective. While Wells remained capped, its big competitors such as JPMorgan Chase and Bank of America experienced enormous asset growth. Being shut out of the expansion certainly made an impression on the new leadership installed at Wells as a result of the scandals.

On the other hand, the track record of Wells since 2018 has not been spotless. In 2022 the CFPB imposed a $1.7 billion fine on the bank and ordered it to pay $2 billion in consumer redress for a variety of illegitimate practices both before and after the Fed enforcement action. The practices included surprise overdraft fees and improper interest charges on auto and mortgage loans.

In 2021 the Office of the Comptroller of the Currency fined Wells $250 million for unsafe practices related to material deficiencies in its loss mitigation activities.

Wells has also been penalized for misconduct in its securities and trading operations. Since 2019 it has paid over $250 million in fines and settlements to the Securities and Exchange Commission as well as $89 million to the Commodity Futures Trading Commission.

Regulators have punished Wells for its employment practices. The Occupational Safety and Heald Administration, which enforces the whistleblower protection provisions of the Sarbanes-Oxley Act, found that the bank had improperly fired a manager who complained about illegal practices and ordered that the manager be paid $22 million in damages. The U.S. Labor Department and state regulators in California and New York have cited Wells for wage and hour violations.

Along with government enforcement actions, Wells continues to face a steady stream of class action lawsuits. In recent years it has paid out large sums in settlements, including $185 million to resolve litigation alleging it improperly put mortgages of struggling customers into forbearance without informed consent during the Covid pandemic, damaging their credit rating.

Wells Fargo may no longer be defrauding customers through the creation of bogus accounts, but it appears unable to avoid numerous other types of misconduct. It thus does not deserve relief from the Fed’s restrictions.  

If any shackles are to be removed, they should be the ones unjustly being imposed on CFPB rather than those properly put on Wells Fargo.