“Tens of thousands of its internal documents will be exposed on Wikileaks.org with no polite requests for executives’ response or other forewarnings.”
That was according to Forbes magazine, which interviewed Julian Assange, the founder of WikiLeaks, last month. The
excerpt sparked a global cacophony of speculation that a bank — perhaps Bank of America — may be the next target of the inscrutable “high-tech terrorist.” (Such was Vice President Joseph R. Biden’s description of Mr. Assange over the weekend.)
And just Monday, Mr. Assange told a reporter from The Times of London that he had enough material to make bosses of a major bank resign.
You’d think that bank executives would be quaking in their Gucci loafers.
But guess who may be even more nervous about the possible data dump?
Regulators in Washington.
It seems the prospect of gigabytes of e-mail and other documents from financial institutions can be viewed one of two ways: as a treasure trove for regulators to scrutinize — or as an embarrassment for the United States government, which has spent millions of dollars investigating Wall Street in the last two years without a scalp to show for it.
Inside the Securities and Exchange Commission, the organization is bracing for a public outcry, according to people who have recently spoken with some high-ranking officials about the prospect of a WikiLeaks release of bank documents.
“The S.E.C. could be on the horns of a dilemma,” said Mark C. Zauderer, a veteran corporate litigator at Flemming Zulack Williamson Zauderer.
A spokesman for the S.E.C. declined to comment.
Of course, no one knows what information Mr. Assange actually has or how damaging it could be to any financial firm. In truth, it is hard to believe any e-mails could be that shocking. The scuttlebutt is that WikiLeaks will reveal documents in which bankers discussed how they duped a client, how they dressed up their numbers or even how they tried to pull one over on regulators. Sadly, perhaps cynically, that’s almost to be expected.
The big surprise would be that such chicanery was documented, in black and white, and that regulators hadn’t found it yet — or worse, they had found it and did nothing about it.
Indeed, legal experts say that if evidence emerged of shady dealings, the biggest problem regulators may face would be explaining to the public why they had not brought charges against a bank.
“The public will often look at the information out of context and not understand,” said Robert A. Mintz, a former federal prosecutor who is now a partner at McCarter & English.
Another difficult issue for regulators will be what to do if damning information is released. Can the S.E.C. or the Justice Department use WikiLeaks as a source to build a case?
Eric H. Holder Jr., the United States attorney general, has said his department is investigating WikiLeaks’s earlier release of classified cables from the State Department as a potential criminal act.
“To the extent that we can find anybody who was involved in the breaking of American law, who put at risk the assets and the people I have described, they will be held responsible; they will be held accountable,” Mr. Holder said at a news conference.
Legally, the government is allowed to use any publicly available information — as long as the government wasn’t involved in illegally obtaining the information itself. So prosecutors could potentially use any WikiLeaks information to subpoena bank documents and build a case around them.
“It’s the theory of the fruit of the poisonous tree,” said Jay Fahy, a former federal prosecutor who now specializes in white-collar crime at the law firm Fahy Choi.
Mr. Assange, too, faces his own legal risk, one that so far has gone unspoken: bank confidentiality laws. In many cases, it is a crime to disclose the private account information of individuals, said Mr. Fahy.
“That’s a violation,” Mr. Fahy said.
Still, the optics of how the government reacts to whatever WikiLeaks releases will pose a challenge.
“It puts them in a terrible bind,” said Mr. Mintz. No matter how the government reacts, “there would be an appearance of a profound inconsistency. It’s less of a legal matter than it is an appearance issue.”