We’ve written at length how the Obama Administration claim that it couldn’t prosecute bank CEOs and senior executives because they didn’t do anything illegal is utter hogwash. Sarbanes Oxley, passed in the wake of Enron, was designed to prevent CEOs and other top executives from escaping liability by claiming they were clueless face men. And it provides for a clear path to criminal prosecutions.
But the way Sarbanes Oxley was defanged is by making it an exercise in form over substance. Public firms engage in compliance theater while the SEC sits on its hands as far as enforcement is concerned (Note that the SEC did fail on its lone effort to use Sarbox against a CEO in the case of Richard Schrusy and Healthsouth. But that case was tried before a jury in Birmingham, Alabama, and I will spare readers the long form account as to why you can’t generalize from these results). Both the MF Global collapse and the JP Morgan Chief Investment Office fiasco look like slam-dunk Sarbox cases, yet we’ve seen nary a sign of interest from the SEC.
Occupy the SEC has used House Financial Services Committee hearings this week on the tenth anniversary of the passage of Sarbanes Oxley to raise pointed questions as to why the SEC has not launched a probe of JP Morgan. I have a sneaking suspicion that this line of thinking won’t get any air time, and instead the Congresscritters will focus on how the nasty law inconveniences fine upstanding major corporations.
I hope you’ll read their succinct and forceful letter.