In a brief — and swiftly decided — per curiam decision issued June 4, 2015, the US Court of Appeals for the Second Circuit affirmed the wire fraud and wire fraud conspiracy convictions of three former UBS Financial Services, Inc. (UBS) traders, finding that their wire fraud offenses triggered a lengthy 10-year statute of limitations available to prosecutors under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). The decision, issued less than a month after oral argument, marks the first time in more than a decade that the Second Circuit has interpreted FIRREA’s controversial requirement that an offense “affect” a financial institution. As importantly, this case might foreshadow how the court may interpret the same language with respect to the application of FIRREA more generally.

FIRREA’s Expansive Scope –

The traders in United States v. Heinz had been convicted under FIRREA’s lengthier 10-year statute of limitations for certain offenses found to “affect[] a financial institution.” Originally passed in the wake of the savings and loan crisis, the powerful statute made sweeping reforms to the financial institution regulatory and enforcement system, most notably, under Section 1833a of FIRREA, creating harsh new civil penalties for violations of pre-existing criminal laws involving or affecting financial institutions. Specifically, Section 1833a imposes hefty fines — up to US$1 million per violation or US$5 million for a continuing violation. Prosecutors may also seek penalties for each discrete violation, enabling the government to seek potentially billion dollar aggregate penalties. Although the underlying offenses are defined in the criminal code, because Section 1833a imposes civil penalties, prosecutors need only prove FIRREA violations by a preponderance of the evidence, instead of the more burdensome “beyond a reasonable doubt” standard that applies in the criminal context.