Skip to comments.Analysis: SEC targets low-level bankers, spares top execs
Posted on 11/15/2011 4:33:23 PM PST by NormsRevenge
WASHINGTON (Reuters) - The U.S. government is not taking advantage of an enforcement tool that could potentially hold top Wall Street figures accountable for their role in the recent financial crisis, despite its prior success.
Broker-dealers, investment advisers, and others regulated by the Securities and Exchange Commission are required to supervise their representatives. If a trader engages in misconduct, the SEC can sue the management with "failure to supervise."
But in some of the biggest cases the SEC has brought in recent months -- against units of JPMorgan, Goldman Sachs, and Citigroup -- the agency has sued only low-level bankers.
Public anger following the U.S. government bailout of major banks in 2008 is fueling such disparate movements as Occupy Wall Street and the Tea Party, but government lawyers say they are bringing cases based on the evidence they have. Some experts argue the agency could be doing more.
"There is an affirmative obligation of supervisors to supervise their subordinates, but not a hint of that here," Duke University law professor James Cox said, referring to the SEC's recent cases against broker-dealer units of the top banks.
"What I see as a method of operation is big entity fines, but not holding any responsible person responsible, thereby robbing enforcement of substantial deterrent effects," he said.
An SEC spokesman declined to comment on its enforcement strategy.
The banks in question have paid between $153 million (JP Morgan) and $550 million (Goldman) since last summer to settle charges that they misled investors on complicated mortgage bond deals. Citigroup agreed to pay $285 million last month to settle similar allegations.
Bankers at the three institutions, the SEC said, hid the fact that they structured the deal to bet against it themselves or on behalf of clients who planned to do so.
(Excerpt) Read more at news.yahoo.com ...
And this is shocking, how?
Where do SEC people go after Government service, right to the same people and places they were supposed to regulate.
The Big Boys not only have good connections with office holders in both parties, but can also throw tens of millions of dollars to a defense attorney.
The mid level guys do not have such connections or cash to pay an attorney.
The JP Morgan banker who is going to jail was a Senior Managing Director, not a small fish.