From the November 01, 2012 issue of Futures Magazine • Subscribe!

Rogue CEOs and absent regulators: Is there a pattern?

The SEC appealed the ruling and Rakoff later issued a supplemental order claiming the SEC filed a “materially misleading” request seeking an emergency halt to further proceedings.

The largest settlement related to the various questionable subprime related products created and marketed by investment banks was Goldman Sachs’ $550 million SEC fine two years ago after getting caught colluding with Paulson & Co. to create and market collateralized debt obligations so that Paulson could take the other side. In fact, this settlement preceded the similar Citi case, adding to Rakoff’s puzzlement. 

Click to enlarge.

The settlements are indeed large, but they close the window to criminal prosecution and prevent us from clearly determining guilt or even wrongdoing — and do little to deter future bad actors. Click here for a complete list of enforcement cases.  

The SEC lists 115 entities and individuals charged with misconduct related to the 2008 financial crisis, which resulted in more than $1.4 billion in penalties ordered or agreed to and $2.2 billion in total monetary relief. Perhaps if firms' existences were threatened by recidivist violations and leaders were held more accountable, this list would be shorter.

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