Quite a few people are asking this question including this investment fraud attorney who is a guest writer at CNBC.com today. It's never made sense to me how trillions could disappear and the only people that have been arrested were some small players who lost a few dozen million. Terrible and deserving, sure, but how do the big players avoid the same treatment? It's either the old boy network taking care of its own or the system itself is completely gutted by lobbyists who have allowed their customers to get away with what should be criminal offenses. Probably some of both but either way, it's disgraceful and it's why people are still fuming.
The primary method for avoiding future violations of state and federal securities laws is vigorous criminal prosecutions of those responsible for the violations. If it becomes clear to Wall Street and insurance executives who take massive risks with shareholder capital (all the while being backed by taxpayer funds should the trades be unsuccessful) that the punishment is a probable prison sentence, this will severely curtail future criminal and fraudulent activity from occurring. The credible threat of prison time will send shock waves through Wall Street and do more than any legislation could hope to ever accomplish.
With minimal penalties if they are caught and massive financial windfalls if successful, it is not surprising that so many Wall Street executives are willing to place their financial interests ahead of those of their investors and the country. Only the realistic threat of prison sentences for rational, highly educated, successful corporate executives will prevent these types of abuses from occurring in the future.
Unfortunately, it appears as though federal prosecutors have become gun-shy since the Bear Stearns hedge fund managers were acquitted. Clearly, these are always tough cases but there appears to be compelling evidence of potential criminal conduct in what can only be described as the largest financial crime in U.S. history costing U.S. taxpayers billions.
