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Since 2007, the U.S. Securities and Exchange Commission has granted the five banks that signed criminal plea deals last week at least 19 waivers to continue normal operations despite their misconduct, with at least seven of them going to UBS AG. And the latest round of waivers last week sparked a deepening dissent at the SEC.

Before the banks agreed to plead guilty last Wednesday, they made sure they had in place waivers from the SEC to keep them from being automatically disqualified from operating normally.

But Commissioner Kara Stein, in her second stinging dissent this month, decried the waivers, citing violation after violation by the banks during the past eight to nine years. Her previous dissent was filed when a waiver was granted to Deutsche Bank AG on May 4.

“Allowing these institutions to continue business as usual, after multiple and serious regulatory and criminal violations, poses risks to investors and the American public that are being ignored,” Stein’s dissent said. “It is not sufficient to look at each waiver request in a vacuum.”

She pointed out that UBS was granted another waiver despite violating the explicit terms of a previous waiver. “This type of recidivism and repeated criminal misconduct should lead to revocations of prior waivers, not the granting of a whole new set of waivers,” she said.

“I am troubled by repeated instances of noncompliance at these global financial institutions, which may be indicative of a continuing culture that does not adequately support legal and ethical behavior,” Stein concluded. “Further, I am concerned that the latest series of actions has effectively rendered criminal convictions of financial institutions largely symbolic.”

The banks generally have declined to comment on the waiver issue.

But at least one former bank general counsel agrees with Stein. “She is absolutely right,” Cornelius “Con” Hurley told CorpCounsel.com Tuesday. “Why have the [automatic disqualification] rule if you’re not going to enforce it?”

Hurley, now director of the Boston University Center for Finance, Law and Policy, said at one time a criminal conviction was something that mattered because a bank would lose its license if convicted of a felony. “Now we have entered a whole new era where a criminal conviction is just ho-hum if you are a Citigroup or JPMorgan,” he added.

Another critic of the waivers is California U.S. Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, who has drafted legislation that would make such waivers more difficult to obtain. “I have been disappointed with the seemingly reflexive granting of waivers to bad actors, which can enshrine a policy of ‘too-big-to-bar,’” Waters said in a statement last March. “For large financial institutions, fines are often a mere cost of doing business, and waiving disqualification provisions allow bad actors to continue to operate in the marketplace undeterred.”

On May 14, Waters wrote a letter to SEC Chairwoman Mary Jo White, urging her to consider that disqualification statutes “are important tools that protect investors, the markets and the public by deterring misconduct, reducing recidivism, promoting market integrity and removing bad actors from the market.” But White was not swayed.

Hurley, however, said Stein and Waters have raised a legitimate issue and as public pressure on the SEC grows, change may yet occur.

Critics also have noted that the SEC tends to refuse waivers to smaller banks, but will grant them to the bigger ones. For Hurley, the recidivist problem is all part of these banks being too large and unmanageable, with no federal agency being willing to inflict real pain on them beyond financial penalties.

This theory seems to be supported by a survey about the financial services industry in the U.S. and U.K. released last week by Labaton Sucharow. Jordan Thomas, a Labaton Sucharow partner and former assistant director of enforcement at the SEC, called the survey’s findings “alarming.”

Thomas said the results show that the banking industry has gotten worse since the financial crisis. The law firm said its report, “The Street, the Bull and the Crisis,” is the most expansive analysis of its kind, looking at the ethical views of more than 1,200 individuals in the finance industry. It was done in collaboration with the University of Notre Dame’s Mendoza College of Business.

The data presented “discouraging statistics,” the law firm said, including the actual witnessing of misconduct, the willingness of professionals to engage in wrongdoing and the perception that breaking the rules is part of doing business for banks.

“We note that nearly half of all respondents felt that it was likely that a competitor has engaged in unethical or illegal activity in order to gain an edge in the market,” the law firm said. And the survey found that 23 percent of respondents reported personally observing or having firsthand knowledge of wrongdoing at work, and that figure rises to 34 percent for those earning more than $500,000 a year.

Thomas declined to discuss whether the SEC has played a role in banks’ behavior or to discuss the waivers. But he noted that the survey suggests “that more work needs to be done to establish a culture of integrity in the financial services industry. If [the industry] fails to do so, there will be more incidents, and the SEC will be facing more difficult choices over waivers.”

Those difficult choices could be coming sooner rather than later. Several news media, including the Wall Street Journal, reported in February, for example, that U.S. officials are investigating at least 10 major banks, including some that signed plea deals over conspiring on foreign exchange rates last week, for possible price rigging in precious-metals markets.

And Reuters reported May 22 that the SEC is investigating two major banks for serving clients linked to a Mexican drug cartel.

As part of the ongoing saga, the SEC Tuesday charged Deutsche Bank AG with filing misstated financial reports during the height of the financial crisis. The reports failed to take into account a material risk for potential losses estimated to be worth billions, the SEC alleged.

To settle the matter, Deutsche Bank, another frequent recidivist, agreed to pay a $55 million civil penalty and vowed to cease and desist from future SEC violations.