Going After Wall Street Criminals

Here's a bit from an interesting article in the New York magazine about a federal prosecutor going after some Wall Street crooks. He is doing a good job but he's only going after low level fish, not the big fish, not the ones at the top who did the trillion dollar damage to the economy:

Bharara and the Galleon case say much about the state of Wall Street justice—or the lack of it—today. Working in the tradition of the last sheriff of Wall Street, ­Eliot Spitzer, and out of the same Southern District office where Rudy Giuliani went after Milken and Boesky, Bharara has made a name for himself as the crusader of the moment against white-collar crime. In less than two years on the job, the 42-year-old India-born Bharara has charged 46 defendants with insider-­trading offenses and procured 30 guilty pleas. The Galleon case is the crown jewel of his work to date. And yet …

To collect those scalps, Bharara has, some say, played rough. He doesn’t grandstand or steamroll the way Giuliani or Spitzer did—in fact, he maintains an assiduously, perhaps even cannily, low profile—but he’s by no means shy about pursuing his marks. To build his cases, he’s used unusually aggressive investigative methods for white-­collar crimes, like wiretaps and search warrants. “It’s not that wiretaps hadn’t been used before, but never in this broad a sweep,” says one prominent white-collar defense lawyer and former Southern District attorney. “A lot of these highfliers never would have imagined that someone would be listening in on their calls. He’s got everyone scared.” Where Giuliani hauled bankers from the trading floors and Spitzer browbeat companies into settlements, Bharara has treated the public to the spectacle of Fortune 500 executives turned like mob stool pigeons, a Goldman director calling Rajaratnam seconds after sitting in on a confidential phone call with Blankfein, and one hedge-fund executive allegedly trying to chew to bits the SIM. card of his prepaid cell phone.

But hovering above all of this is the question of whether Bharara is fighting the right war. Three years after Lehman Brothers collapsed, no one responsible for the greatest financial calamity since the Great Depression has gone to jail, and a meaningful remedy for the transgressions of 2008 clearly isn’t forthcoming from Congress or the White House. Bharara may be winning his share of insider-trading battles, but unlike Giuliani or Spitzer, he doesn’t seem to be hauling in the biggest bad guys of his time. Whatever satisfaction comes from seeing Rajaratnam and company squirm, and possibly go to jail, there is still a sinking feeling that they’re only the most expedient, not the biggest, targets. “Preet’s smart,” says one friend and fellow prosecutor. “White-collar cases are difficult. The one area where they’re less difficult is insider-­trading cases.”

Something is better than nothing, but it really galls me that the big fish are still dancing free. The only way to stop crime is to go after the kingpins. The guys lower down the food chain can always be replaced easily. It is the big masterminds that are harder to replace so taking them down does leave a dent. And... it puts a real scare into the criminal class.