Wikileaks, source of nearly two dozen international government and military leaks since 2006, said Monday that they are preparing yet another high-profile leak set for sometime early next year. Wikileaks founder Julian Assange told Forbes’ Andy Greenberg that the leak would involve a major U.S. bank and would shed light on the culture of self-interest at the executive-level, calling it an “ecosystem of corruption.”
The Dow Jones, S&P 500, and NASDAQ all closed down after the story broke. Bank of America, which many consider to be the bank in question, saw its stock price drop 3 percent since the speculation arose surrounding the bank. It currently sits at its lowest price since May 2009.
While Mr. Assange speculates that the news could bring the unnamed bank down, it is unlikely that any of the major banks would feel any permanent effects of any negative leaks, barring those that expose a wide-reaching, systematic processes of defrauding customers or the government out of large amounts of money. Even then, banks have been accused of as much and continue to prosper.
In August 2009, a settlement was reached in the class action lawsuit Closson v Bank of America. The lawsuit contended that Bank of America arranged its transaction-processing, account balance information, and that they deliberately authorized debit card transactions that would overdraw accounts, resulting in more fees collected by the Bank. While Bank of America agreed to settle for $35 million, they also claimed they did nothing wrong. The announcement of the settlement did nothing to affect the stock price, as Bank of America’s stock continued to rise in August 2009, as they became the number one bank in the country by market capitalization and assets.
According to an article in USA Today, dated Oct. 2, 2003, Bank of America was implicated in a mutual fund scandal in which it colluded with a hedge fund company to allow trading after market close contrary to the laws set forth by the Securities and Exchange Commission. The hedge fund company, Canary Capital Partners, LLC, settled without an admission of guilt. Bank of America would later repay any losses to shareholders received by any illegal transactions. Their stock price was unaffected by the settlement.
Earlier this year, Goldman Sachs was given a record fine for its part in defrauding customers by selling packed up subprime mortgages to investors while omitting key facts about the product. Namely, a major hedge fund who had a part in selecting which mortgage securities were involved in the package was also betting against it. For its part in marketing the collateralized debt obligation, Goldman Sachs was levied a $550 million fine. On April 16, 2010, when the SEC filed the suit, Goldman stocks fell 13 percent. At its worst, the stock bottomed out on July 2, dropping to 131.08, having lost over 28 percent of its value.
As the saying goes, time heals all wounds. Bank of America continues to be the nation’s largest bank. Goldman Sachs’ stock is increasing back to levels at or near what it is was before the lawsuit broke. Companies will continue to do business how it suits them best and how it will make them the most amount of money. Government leaders’ hands will be wrung, fines will be paid, and business will return to normal. It looks highly improbable that Wikileaks could have anything on any bank that could cause its downfall.
Andy Greenberg, “An Interview with Wikileaks’ Julian Assange ” Forbes
Closson v. Bank of America
Top Bank Holding Companies FFIEC
Christine Dugas, ” Former Trader Pleads Guilty in Hedge Fund Case ” USA Today
Ann Riley, “Goldman Sachs reaches record $550 million settlement with SEC ” Jurist