Via an e-mail from someone who has worked at the SEC. Note that the reason for the mention of the Department of Justice is that the SEC cannot bring criminal cases on its own, but has to secure the cooperation of the DoJ.
The SEC-DoJ relationship is not entirely functional, but I suspect that the hangup is likely to be on the SEC Enforcement side. Enforcement only takes a limited number of cases due to limited resources, and as such tends to favor cases that are relatively clear-cut, where it has a good chance of winning. Enforcement may shy away from difficult cases (or settle quickly out of court), unless the Commission makes a specific issue a priority.
But difficulty is not the only factor; another major consideration is whether a similar case has been pursued in the past. Novel cases are considered to be more high-risk, and Enforcement will generally be less likely to take them up unless they are very solid cases, or, again, a high priority from the Commission level.
When Compliance works on referrals to Enforcement, it typically tries to make the case as clearly and as strongly as it can; and ideally, refer to another (successful) case where there are common aspects. When Enforcement receives a referral from Compliance that deals with a range of novel issues, they may be interested in taking the case, but may press Compliance re: what the specific violations are, what evidence it has for them, etc. Similarly, for outside tips and complaints, the issue may be passed off to Compliance to gather further information before Enforcement picks it up and presses charges.
As for Lehman, it is relevant that it would theoretically be a different kind of case than many that have been brought in the past. Especially for criminal convictions, the issue is putting together a case that will convince a jury, which for complex financial issues is a high bar to get over (they were able to do it with Enron, but there were charges–which may have some merit–that it had been “tried in the media” before it ever hit the courtroom.)
Yves here. Note how perverse this is. Sarbanes-Oxley was created to prevent a repeat of Enron abuses and other big corporate accounting frauds that were appallingly common in the dot-bomb era. But the SEC is loath to prosecute….because no criminal cases have yet been brought under Sarbox. So what good is passing new laws if the enforcers are unwilling to use them?
It would seem that the only way to get what would seem to be a straightforward case brought, give the extent of discovery already done by Valukas, is to bring pressure on the SEC and the Obama administration generally. Given the amount of press on the Lehman report, that might not be much of a stretch.