When an executive at one of Wall Street’s top consulting firms testified before Congress two years ago, he stressed the importance of independence in reviewing bank misdeeds, declaring, “If we merely told our clients what they want to hear, we would lose credibility.”
A long-running New York State investigation into potential conflicts of interest at the firm, Promontory Financial Group, is now calling some of that credibility into question, according to lawyers briefed on the matter. And in an escalation of the investigation, state authorities recently subpoenaed several of the firm’s employees, including the executive who testified before Congress.
The subpoenas from New York’s financial regulator, the latest step in a two-year inquiry, require that at least six Promontory employees sit for depositions beginning on Tuesday, the lawyers said. The development signals that the investigation, which at times grew bitter as Promontory resisted the regulator’s requests for documents, has reached its final stages and could soon yield a punishment.