The U.S. Department of Justice has taken a serious and significant step to finally treat financial crimes in the same aggressive way it would treat drug cartels, environmental abusers and anti-trust cases.
The prosecution of SAC Capital Advisors by the U.S. Attorney in Manhattan recently brought about the first guilty plea by a large Wall Street firm in more than a decade. It’s a fact that probably stuns most Americans - that only one Wall Street firm has faced the music after nearly a decade of financial crimes that have devastated average investors, citizens and small businesses on Main Street.
The investigation and prosecution took nearly a decade and spanned Republican and Democratic administrations. SAC Capital pleaded guilty to five counts of insider trading in the original indictment and agreed to pay a fine of $1.2 billion. Eight of its former traders also have been charged with securities fraud.
Experts say the case may mark the beginning of a more aggressive approach to firms violating securities laws who once may have been considered “too big to jail.”
U.S. Attorney for Manhattan Preet Bharara, in announcing the settlement, said that “No institution should rest easy in the belief that it is too big to jail.” He called the fine “steep but fair,” and “commensurate with the breadth and duration of the charged criminal conduct,” according to a report in The New York Times.
Investor and SAC Capital owner Steven A. Cohen has personally escaped criminal prosecution so far, but officials say the U.S. Attorney’s office continues to look at trading records and seeks help from informants for possible criminal prosecution of Cohen. The plea agreement specifically states that no individual has immunity from further prosecution.
Not since the prosecution of junk bond promoter Michael Milken and Drexel Burnham Lambert more 20 years ago have Wall Street firms been held accountable for their misdeeds. Many have paid fines to the SEC over the years with the caveat of not admitting guilt.