BNP Keeps Investors Guessing About U.S. Sanctions Penalty

Bloomberg Businessweek
June 16, 2014

Jordan A. Thomas says BNP Paribas investors deserve more information regarding the company's pending settlement amount resulting from U.S. sanctions violations

BNP Paribas SA (BNP) has given investors scant information about how much it expects to pay to settle a criminal probe of U.S. sanctions violations.

The bank told shareholders at an annual meeting on May 14 that the settlement could be significantly more than the $1.1 billion it had set aside for the case. On May 29, Bloomberg News reported that U.S. authorities have demanded more than $10 billion, citing a person familiar with the matter. Since then, the bank hasn't provided additional information about the possible size of a settlement.

BNP Paribas isn't required under international or U.S. accounting standards to disclose more. Analysts are saying what the bank has not: the penalty could wipe out dividends and weigh on future earnings.

Labaton Sucharow partner Jordan Thomas, who has represented banks' shareholders, said the discrepancy between BNP's disclosures and reports of a possible $10 billion settlement suggests the bank hasn't said enough.

"There's no question that investors who purchased the stock in recent months would have wanted to know the true scope of the problem," said Thomas, who previously worked as a trial lawyer at the Securities and Exchange Commission.