The gist of the whole thing, in chronological order, is that Professor Richard Quinn had stated a long while prior to the midterm that he wrote the exams himself. Just prior to the midterm, a test bank had been circulated around a large portion of the student body, so a large portion (from a third to a half) of the students got to study from a test bank.
Later, during the midterm, students discover that the questions all came out of the test bank! After the midterm, Prof. Quinn looked at the marks and discovered that there was statistical anomalies, strongly suggesting that something was amiss. Then some anonymous individual printed off and dropped off the test bank to Quinn, exposing the reason for the statistical anomalies Quinn found in the marks.
So what is Quinn to do?
Well, in consultation with the higher ups, Quinn decides to give the class a lecturing, and to ask the students to turn themselves in, in exchange for amnesty plus an ethics seminar. In return, Quinn will re-administer a new midterm exam that all students (innocent or not) must take, and the old midterm marks are purged. If a student who had access to the test bank does not turn themselves in, and if they are caught, then they will face formal academic sanctions, up to expulsions.
About 200 students turned themselves in, and apparently about 15 did not. And everyone, guilty or not, are quite unhappy with the whole incident.
Students complain that they didn't know the exam questions would come out of that test bank, and that given Quinn said he makes up his own exams, they have every reason to believe that the midterm would, in fact, contain no questions from the test bank. But these are senior-level students in a capstone course in university! If a student at that level of study receives from his or her buddy a complete or near complete set of test bank questions, I would sure hope they have the presence of mind to think, "wait, something's shady about this. I should ask the prof about it." The fact that of the 200 or so students, no one had that presence of mind, speaks volumes about the moral and analytical education those students have received.
"But wait! Prof. Quinn said he makes up his own exams!" Sure, he makes up his own exams, with the help of the test bank, a legitimate resource he is privy to. Using that as an excuse to using the test bank to study from is like saying that a teacher who makes up his own course isn't allowed to consult, or even photocopy whole sections from, a textbook. In fact, educational institutions  pay big bucks to allow teachers to photocopy whole sections from textbooks for the very reason that this is accepted practice. So is using a test bank. We can debate whether using only questions from test banks is good teaching practice, but that doesn't take away from the fact that it is accepted practice. And using this as an excuse for studying from the test bank is just that, an excuse.
What's been missing in the discussions I've read so far is the concept of academic integrity though. "Cheating" is such an emotionally loaded term, primarily due to it being so often used while students were in grade school, so I prefer the concept of integrity, it being a term with more maturity. My favourite explanation of academic integrity is from the University of Alberta. The key values that applies in the current circumstance is Fairness (in how you treat your peers) and Respect (by giving credit where credit is due).
Students who had access to the test bank must know that not all students have it, given it was not distributed by the instructor, and that it's not something that's easy to find on the internet via Google Search. How can it possibly be fair that some students have access to the test bank while others do not? Furthermore, once a student who had studied from the test bank realize that the questions on the midterm are from the test bank, did they write down along with their answers a full citation to give credit where credit is due (it's due to the test bank)? No! The lack of academic integrity is obvious.
Some of the innocent students are complaining that they're being punished too, since all students must retake the midterm, whether they perused the test bank or not. I actually don't think they're being punished by the instructor. Instead, I think they're just victims of the lack of academic integrity of their fellow students. Integrity isn't just about personal integrity, it's also about communal integrity. When a portion of that course's student community created an unfair advantage, and didn't cite the source of their answers, it brings into question whether any students' midterm score is accurate, fair, etc, not to mention it casts a shadow on the integrity of every student from that course and from that university. The community suffers, including the innocent students.
 I'm speaking of educational institutions in Canada, to be sure, but I'm reasonably confident that institutions in the US also have a similar arrangement. In fact, US copyright laws have a concept of fair use that is much more permissive than the Canadian copyright law's concept of fair dealing.