Guilt Without Trial—The FX Rigging Case

By Alexander R. Cohen

May 30, 2015

Did the banks that pleaded guilty to conspiring to fix currency exchange rates actually do anything illegal? Who knows? Thanks to the Department of Justice’s method of resolving the case—which may have included threatening punishment even it deemed unjust—we don’t know. We don’t even have a very good basis to think the banks broke the law.

If the penalty provided under the plea deal is fitting and commensurate, any greater penalty at trial would have been more than what fits the crime.

Had the cases gone to trial, the government’s allegations could have been tested. Witnesses could have been cross-examined; the defense could have brought forward evidence of its own. And the defense could have argued that even if the banks did what the government alleges, it wasn’t a crime. By agreeing to plead guilty and pay record-breaking fines, the banks waived all that.

Why? Well, one possibility, of course, is that the banks were guilty and knew it. But another is that they were afraid of the harsher sentences they could have gotten if they’d gone to trial and lost. The plea agreements say (see section 13 of this one, which is typical) that the fines called for by the federal sentencing guidelines exceed the fines provided under the plea agreements. If so, that would have supported the government in seeking harsher fines after a trial than the plea deals provide.

Does that mean that if the banks are guilty as charged, they’re being punished less than they deserve? Not in the judgment of our new attorney general, Loretta Lynch. In prepared remarks, she said:

“The penalty all these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct. It is commensurate with the pervasive harm done.”

But if the penalty provided under the plea deal is fitting and commensurate, any greater penalty at trial would have been more than what fits the crime. It would have been punishment, not merely for violating antitrust law, but for insisting on the right to a trial. So unless some other provisions make the overall penalty in the plea deal as steep as the sentencing guidelines call for, if it was Lynch’s strategy to use the threat of the guidelines fine to force the banks to accept these plea deals, she was threatening a sentence harsher than she herself thought was “commensurate with the … harm” in order to make the banks submit to the punishment she thought was “fitting.” To be assured of a sentence no harsher than even the country’s chief prosecutor thought was “fitting,” the banks had to give up their right to a trial. If they had gone to trial and lost, the prosecution might well have asked for a harsher sentence.

Fair trials can protect us from unjust punishment, and American law proclaims many principles designed to uphold individual rights and keep the innocent safe. But if prosecutors can bully us into giving up our right to a fair trial, we will get little value from the protections that the law proclaims.

A version of this article first appeared on the Center for the Individual’s site under the title, “Are the Banks Actually Guilty?”

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About the Author: Alexander R. Cohen

Alexander R. Cohen has written and presented on a variety of legal and philosophical issues, he has taught undergraduate courses on law and bioethics, and he may once have been the most experienced student journalist in the United States. His writing has been published by The Miami Herald and The Daily Caller. He has edited or copy edited books in politics, fiction, and humor. He is available to edit for you.

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