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Consulting Firm Promontory Financial Suspended By NYDFS

Some might say you get what you deserve when you hire a fox to watch the henhouse, and not surprisingly that seems to be the case with consulting firm and "shadow regulator" Promontory Financial Group.

As noted first by the New York Times: "Promontory Financial Group occupies a position of trust in the global financial system, acting as a consultant to big banks, foreign nations and the Vatican. Its influence has soared over the years, positioning it as a sort of shadow regulator that provides government authorities with a window into bank misconduct. And the firm’s political ties run deep, thanks to its founder and chief executive, Eugene A. Ludwig, a former top banking regulator and a law school friend of Bill Clinton."

However, the New York state financial regulator suspended Promontory from conducting most consulting assignments for banks that are licensed in New York and suspected of wrongdoing. Analysts note that the NYDFS suspended the firm indefinitely, which is very rare. The reasons for the suspension were presented in a report that alleges that Promontory actually worked...