Financial regulations carry three types of penalties: - Criminal: go straight to jail - Civil Fines: pay money - Civil Injunctions: never work in finance aga

Financial regulations carry three types of penalties: - Criminal: go straight to jail - Civil Fines: pay money - Civil Injunctions: never work in finance again In the United States there are several entities charged with enforcing financial regulations. You can roughly divide them up by jurisdiction: - Federal agencies: Securities and Enforcement Commission (SEC) which can only enforce civil penalties, Department of Justice (DOJ) which can send you to jail, and other three-letter agencies. - States and local governments: New York Attorney General, Manhattan District Attorney, etc. - Self-Regulatory Agencies: New York Stock Exchange, Chicago Board Options Exchange, etc. can investigate on their own. If this sounds complicated, well, it is! A company under investigation has to consider the ramifications that resolving one investigation will have on others. Traditionally, companies settled with NYAG and the SEC on civil grounds without admitting or denying liability. This is because admitting fault will almost certainly screw up your defense against the federal criminal investigation, which is what you're really afraid of anyway. (Not to mention hundreds of private lawsuits that will be filed if you assume fault). New York Attorney General's office can pursue criminal charges as well but the penalties aren't as feared as federal criminal charges. Defendants assume correctly that if they're going to be convicted in state courts, they're going to be convicted in federal cases as well. So there's not much incentive to resolve a state criminal case when federal prosecutors are circling the water. From the NYAG's perspective, they know that any criminal charges they bring will be second fiddle to the federal criminal charges. It could make more sense to 'strike the first blood' and get a financial settlement from a company before the federal hammer falls. And from the company's perspective, settling early with the AG might be a way to show the federal prosecutors that it is capable of reforming its ways. Federal criminal charges will kill a company. If federal prosecutors can be convinced that the company is capable of being reformed, they might agree to a Non-Prosecution Agreement (or Deferred Prosecution Agreement) which says, company admits X, Y, Z, and will pay $$$, and will agree to outside monitoring to make sure it doesn't break laws again, in exchange for not being charged with a crime. It's kinda like a plea agreement except the company isn't formally convicted. Executives and individuals responsible for the wrongdoing often get thrown to the wolves. I wouldn't want to be Tether execs right now.