BNP Paribas' Woes Continue: Senior Officials Under Probe
Even before Paris-based BNP Paribas SA (BNPQY) could recover from the impact of the money-laundering case, it has yet again come under scrutiny. This time, French prosecutors have initiated a preliminary investigation against the senior officials of the company.
According to sources, the prosecutors started an inquiry early this month to probe if the senior managers were aware of the bank’s exposure to litigation risks in the U.S. market and whether or not they sold their shares last year to exploit this insider information.
These sources further revealed that three senior executives of the bank sold around 300,000 shares in 2013, when BNP Paribas was facing an inquisition in the U.S. for sanction violations. The investigation is expected to primarily revolve around these three officers.
This preliminary investigation, however, does not indicate any misconduct under the French law and can be discarded in case of failure in obtaining any substantial evidence of delinquency. Nevertheless, if the probe succeeds in unveiling any wrongdoings by the officers, it will surely not come with much of a warm welcome from BNP Paribas.
Flashback – Money-Laundering Case
In Jul 2014, after months of investigation and negotiations, BNP Paribas finally pleaded guilty of criminal charges for falsifying business records and violating the International Emergency Economic Powers Act.
The company had knowingly and repeatedly violated U.S. sanctions against Sudan, Cuba and Iran, for which it was penalized with a hefty settlement charge of nearly $8.9 billion. The bank’s U.S. dollar-clearing operations were suspended for one year and services of around 13 employees were terminated.
Our Take
The global banking industry is seemingly burdened under several investigations surrounding allegations relating to money-laundering, sanctions violation, tax evasion and so on. Other foreign banks such as Credit Suisse Group AG (CS), HSBC Holdings plc (HSBC) and Deutsche Bank AG (DB) have also bear the brunt of such charges.
Currently, BNP Paribas holds a Zacks Rank #4 (Sell).
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