A daily fine of $50,000 against Bank of China Ltd will be imposed by a U.S. Federal Judge starting next week after holding it in contempt for refusing to turn over account information on Chinese customers accused of selling counterfeit luxury goods.
U.S. District Judge Richard Sullivan in Manhattan said the “coercive fine” will be imposed starting on Dec. 8 unless the state-run bank complies with subpoena requests for the records.
Bank of China is appealing the order.
The records are from Chinese entities sued in 2010 by Gucci, Yves Saint Laurent, Bottega Veneta and other units of Paris-based Kering SA for trademark infringement over their sales of knockoff handbags, briefcases and other products.
The Bank of China, not a defendant, said it could not turn over the records without violating Chinese privacy law and that the judge lacked jurisdiction to force compliance. The Judge disagreed.
“Bank of China’s refusal to comply with U.S. law, while it continues to receive the benefits attendant to its banking activity in the United States, has inflicted a significant harm on plaintiffs and the general public,” the Judge wrote. “Only a large fine will have a coercive effect on BOC at this stage.” He noted that the fine represents a tiny fraction of Bank of China’s roughly $27.8 billion of profit in 2014.
The Judge initially ordered Bank of China to turn over customer records in 2011. He renewed his order in September, after a federal appeals court told him to revisit the matter in light of a recent U.S. Supreme Court decision.