Expect a wave of criminal indictments, says CNBC

US media channel warns the public outcry following the government’s banking bail-out will lead to a wave of criminal indictments

NEW YORK – White-collar crime experts expect a wave of criminal indictments to occur in the next few months in the US, as politicians seek to appease angry investors and constituents over their bail-out of failing banks, according to the CNBC US news channel.

With vast amounts of public money being used to prop up the failing financial system, politicians are anxious not to be seen to be giving bankers a free ride. They will almost certainly step up action to meet the public outcry that bankers be held to account for their role in the financial crisis. Acts of concealment and/or misrepresentation will be areas of investigation and potential prosecution for authorities.

“I think we're going to see some ‘perp walks’,” said Columbia Law School professor John Coffee to CNBC. “Perp walks are the police practice of having the accused appear in public wearing handcuffs.”

“I think it’s coming” said securities lawyer Jacob Zamansky, predicting the “outcry for culprits and scapegoats” will be met.

It is clear the US authorities are investigating all financial services firms closely for any wrongdoing, and the media has already revealed, but not yet confirmed, that the FBI is investigating several large multinational banks. However, because most resources are being channelled into securing the fragile financial system, criminal prosecutions are not expected until 2009. The imminent election might also be slowing down the process.

But momentum is building, according to the CNBC report. The government recently issued subpoenas to a dozen executives at Lehman Brothers, which CNBC learned included chief executive officer Richard Fuld, two chief financial officers and a chief operations officer.

Zamansky, who is representing investors in a Bear Stearns hedge fund case, also sees possible wrongdoing in the way firms were marking assets, and in brokers pushing bank stocks with diminished prospects that quickly plummeted in value.