[caption id="attachment_36081" align="alignright" width="200" caption="Preet Bharara, Manhattan U.S. Attorney"][/caption][ by Melanie Gretchen ]

New York's committment to investigate, indict, subpoena, and fine has reached a new high with the addition of the State Department of Financial Services.  Former federal prosecutor Benjamin M. Lawsky joins the state's elite enforcement and regulatory force, including the Manhattan U.S. Attorney, the state Attorney General, the District Attorney's office - and Wall Street is none too happy.  

The Players

Manhattan District Attorney Cyrus Vance

• Indicted a NY bank for alleged mortgage fraud, one of few recent indictments of a U.S. bank.
• Agreed to $619 million settlement with ING Bank over illegal dealings with Iran.

Manhattan U.S. Attorney Preet Bharara

• Indicted Swiss Bank, UBS, for assisting U.S. customers with evading their tax obligations.
• Broke up hacking ring with ties to international group, "Anonymous."
• Charged 71 people, convicted 67, on insider trading charges over 2-year period.

NY Attorney General Eric Schneiderman

• Launched consumer-fraud inquiry involving energy-drink makers.
• Leads joint federal and state task force investigating mortgage fraud.
• Opened antitrust probe of interest-rate manipulation by banks.

NY Superintendent of Financial Services Benjamin Lawsky

• Under threat of revoking banking license. secured $340mn settlement with Standard Chartered,
• Opened probe into banks' practices in selling forced-placed insurance to homeowners.
• Sent letters inquiries to insurers about their dealing with affiliated entities.

A United Front.   What concerns corporate and financial executives and their advocates is the kind of "vicious cycle" that defined AG Eliot Spitzer, "where financial regulators are competing more for headlines than ensuring that our markets are competitive," according to Tom Quaadman, vice president of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness.

Mr. Spitzer acknowledged the potential for too many cooks: "Competition works whether in the private sector or in government.  Having said that, there is always a legitimate concern of chaos and confusion," he added. "Some degree of teamwork is required."

Case in Point: Mr. Lawsky obtained obtained a $340 million settlement from Standard Chartered PLC over U.S. sanctions violations

• Pro: He set a precedent for future charges.
• Con: He jumped ahead of other agencies who were still investigating, which could complicate future investigations by signaling that state and federal regulators no longer act as a unified front.

History of Success. To date, competition has taken the backseat to cooperation.  As the Manhattan District Attorney put it: "competition is not acceptable if it is counterproductive."

• The Manhattan U.S. attorney's office, for instance, has referred cases to the District Attorney's office and the two have worked together on large investigations into cyber crime and other areas.
• New York AG Eric Schneiderman collaborated with federal agencies like the SEC and the DOJ in a mortgage-fraud task force.
• Mr. Lawsky meets often with Manhattan U.S. Attorney Preet Bharara and has worked on mortgage fraud cases with both the federal prosecutor and New York Attorney General Eric Schneiderman.

"The financial crisis made abundantly clear that we need more, not fewer, hands on deck at all levels of government working together to ensure New York's financial markets are the strongest and fairest in the world." -- Mr. Lawsky.

For further details, go to [WSJ, 8/29/12].