When a company is caught breaking the law, they often have to pay a large criminal fine. In some cases, this can be the largest sum of money that a company has ever had to pay. So, what are the largest fines paid by companies?
In this article, we will take a look at the 10 companies that have paid the largest criminal fines in history. We will explore why they were fined and how much money they had to pay.
10 Largest fines paid by companies
Here is a quick look at the top ten largest criminal fines ever paid by companies:
1. BP ($18.7 billion)
2. Bank of America ($16.65 billion)
3. Volkswagen ($14.7 billion)
4. JP Morgan Chase ($13 billion)
5. BNP Paribas ($8.9 billion)
6. Citigroup ($7 billion)
7. Anadarko Petroleum ($5.15 billion)
8. Goldman Sachs ($5 billion)
9. GlaxoSmithKline ($3 billion)
10. Credit Suisse ($2.5 billion)
1. BP ($20.8 billion)
After the infamous oil spill in the Gulf of Mexico, BP was found guilty of several federal crimes. These included 'Negligent Manslaughter', 'Clean Water Act Violations', and 'Obstruction of Congress'. As a result, the company was forced to pay $18.7 billion in a record-breaking environmental fine, the largest sum ever paid by a company.
In total, BP and its partners have spent a whopping $71 billion as a consequence of the incident.
2. Bank of America ($16.65 billion)
Bank of America was charged with its involvement in the 2008 financial crisis. The company was fined $16.65 billion as a result of these actions. The Justice Department found that Bank of America defrauded investors by selling them residential mortgage-backed securities (RMBS) without fully disclosing the risks.
Its involvement in the subprime bubble, that would eventually push the housing market to collapse is still a mark on the bank’s legacy.
3. Volkswagen ($14.73 billion)
In 2020, Volkswagen pled guilty to federal charges of 'Conspiracy to Defraud the United States, Wire Fraud and Violate the Clean Air Act'. The company was fined $14.73 billion as a result of these actions. Essentially, they lied about the emissions that their cars produced to sell them in the US.
4. JP Morgan Chase ($13 billion)
This major bank was also involved in the 2008 financial crisis. The company was fined $13 billion for its participation in the mortgage-backed securities market which would eventually contribute to the housing crash.
5. BNP Paribas ($8.9 billion)
This French bank was charged with laundering money for other nation-states such as Cuba, Iran, and Sudan. This violated U.S regulations because these countries were under economic sanctions at the time. The company was fined $8.9 billion as a result of these actions.
6. Citigroup ($7 billion)
This bank also committed mortgage fraud during the 2008 financial crisis. The company was fined $7 billion as a result of these actions. By misleading investors, the company was able to sell bad mortgages and make a profit off of them.
7. Anadarko Petroleum ($5.15 billion)
Environmental concerns have been a major issue for this company. In 2014, they were found guilty of 'Clean Water Act Violations'. This means the company illegally discharged pollutants into waterways. The company was fined $51.50 billion as a result of these actions.
8. Goldman Sachs ($5 billion)
Selling mortgage-backed securities was also a major issue for Goldman Sachs during the 2008 financial crisis. The company shared a similar fate as other banks and was fined $5 billion for its malpractice.
9. GlaxoSmithKline ($3 billion)
As mentioned earlier, GlaxoSmithKline was charged with federal crimes related to 'Fraud Allegations and Failure to Report Safety Data'. This means that the company was found guilty of fraudulent marketing practices, as well as failing to provide accurate information about the safety of its products. As a result, the company had to settle for $3 billion with the Department of Justice.
10. Credit Suisse ($2.5 billion)
Tax evasion is synonymous with Credit Suisse these days. Many people believe that they are untouchable because they are a large bank. Unfortunately for Credit Suisse, the US government doesn’t care how big you are. In 2014, Credit Suisse pleaded guilty to helping wealthy Americans evade taxes and was slapped with a $2.5 billion fine.
What can investors learn from this?
It is important to know about the criminal history of a company before investing. Many of these companies have been involved in major scandals that have resulted in billions of dollars in fines.
As an investor, you need to decide if you are comfortable with the risks associated with these companies. Do your research and always consult with a financial advisor before making any investment decisions. Increase your financial IQ and don't mistake sales pitches for advice.
You may have noticed a pattern here with banks. They all share the same fines for selling mortgage-backed securities. It is important to know when you are being sold something that may not be in your best interest.
The next time a bank, broker, or business tries to sell you something, make sure to do your own research and consult with a financial advisor. Do not let anyone take advantage of you.
Industries to be aware of:
- Financial services ($331.6 Billion)
- Pharmaceuticals ($56 Billion)
- Oil and Gas ($45.8 Billion)
The total amount of fines for these industries combined is $433.4 billion. As an investor, you need to be aware of the potential risks associated with these industries. This means environmental concerns, toxic security misconduct, false advertising, and fraudulent safety reports should be included in your risk assessment.
Why did Pfizer pay the largest pharma criminal fine in history?
Pfizer, the world's largest pharmaceutical company, pleaded guilty in 2009 to criminal charges related to the illegal promotion of certain drugs. The company was fined a record $2.3-billion for these actions.
This was done by taking doctors on private jets to lavish resorts, paying them kickbacks, and giving them other financial incentives to prescribe the company's drugs. This created a huge conflict of interest, as doctors were prescribing drugs that may not have been the best for their patients, but rather the ones that would line their own pockets.
At the time, Pfizer was the record holder for the largest criminal fines paid by companies. However, the bar has been set even higher for misconduct as more companies from multiple industries have since been found guilty of crimes.
Pfizer criminal history
Pfizer's criminal history goes back much further than this one incident, however. In 2002, the company pleaded guilty to federal felony charges stemming from its illegal marketing of an anti-inflammatory drug. That same year, Pfizer was also charged with Medicaid fraud in New York State.
In 2004, Pfizer was also fined $430 million for Off-label promotion. This means that the company was illegally promoting its drugs for uses that were not approved by the FDA.
Pfizer has also been accused of numerous other crimes, including bribery, price-fixing, and kickbacks. However, these charges have not resulted in any criminal convictions.
Who paid the second-largest criminal fine in history
When it comes to big pharma, the second-largest criminal fine in history was paid by GlaxoSmithKline, another major pharmaceutical company.
In 2012, the company pleaded guilty to federal charges of 'Fraud Allegations and Failure to Report Safety Data. The company was fined $3 billion as a result of these actions.
However, when looking at all industries, Bank of America holds the title for the second-largest criminal fine in history. Make sure to read more as we explore the largest fines paid by companies and what investors can learn from this.
Conclusion
Pfizer was once the record holder for the largest criminal fine ever paid by a company. However, they have since been eclipsed by other large companies.
Malpractices seem to centralize around a few key industries. As an investor, it is important to be aware of these risks before investing your hard-earned money. Do your research and always consult with a financial advisor.