(Corporate) Crime Most Definitely Pays

The New York Times reports that on August 7 a federal judge approved a settlement between the Justice Department and Morgan Stanley. Here’s the crime. In 2006 Morgan Stanley entered into a complex swap agreement with the New York electricity company KeySpan that gave it a stake in the profits of a competitor, enabling both to push up the price of electricity.

Here’s why crime pays. Total cost to New Yorkers from the price fixing: $300 million. Fees paid to Morgan Stanley for making the swap agreement: $21.6 million. Penalty Morgan Stanley is going to pay because of its crime: $4.8 million. And Morgan Stanley doesn’t have to admit any wrong doing.

There will be no further prosecution.

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David Morris

David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.