Legacy Liability and “Skeletons in the Closet” – the Uber Bank Version
Uber banks in Europe (e.g. HSBC) are under increasing scrutiny for creating or aiding and abetting various forms of tax fraud and other financial frauds. As one result, the litigation industry will continue to grow and thrive. Another result is increasing use of the term “legacy liability” with respect to financial houses. For example, consider this reference from a February 18, 2015 Financial Times article about a dawn raid to seize computers and paper records from HSBC:
“Guenther Dobrauz, head of legal and regulatory services at the Zurich office of PwC, the consultancy, said he expected further scandals and investigations of this nature at other Swiss institutions in the coming months.
“There are still a lot of legacy issues from historical business models that will increasingly come to the fore,” said Mr Dobrauz. “I am expecting [a development in this area] every other day as cleaning up history usually takes a bit of time. I expect there are still quite a few of those skeletons around, but just because one thing pops up, I would not say the whole [system] is bad.”