Federal Judge Slams DoJ for Not Prosecuting Wall Street Execs

A federal judge with a history of slamming the regulatory system issued scathing remarks against the Department of Justice on Tuesday for allowing Wall Street executives to escape criminal prosecutions.

Speaking at an event hosted by the New York City Bar Association on Tuesday, U.S. District Judge Jed Rakoff of Manhattan said the DoJ’s “unconvincing” excuses for not prosecuting individuals were “technically and morally suspect.”

“[Not] a single high level executive has been successfully prosecuted in connection with the recent financial crisis, and given the fact that most of the relevant criminal provisions are governed by a five-year statute of limitations, it appears very likely that none will be,” Rakoff said.

While the DoJ has not said that all the top executives are innocent in the lead-up to the financial crisis, it “has offered one or another excuse for not criminally prosecuting them—excuses that, on inspection, appear unconvincing,” the Financial Times reports Judge Rakoff as saying.

“Just going after the company,” which could lead to deferred prosecutions and nominal fines, is “both technically and morally suspect. It is technically suspect because, under the law, you should not indict or threaten to indict a company unless you can prove beyond a reasonable doubt that some managerial agent of the company committed the alleged crime; and if you can prove that, why not indict the manager?”

“And from a moral standpoint, punishing a company and its many innocent employees and shareholders for the crimes committed by some unprosecuted individuals seems contrary to elementary notions of moral responsibility,” Rakoff said.

Ultimately, “the failure of the government to bring to justice those responsible for such a massive fraud speaks greatly to weaknesses in our prosecutorial system that need to be addressed,” he said.

And “to federal judges who take an oath to apply the law equally to the rich and the poor, this excuse, sometimes labeled the ‘too big to jail excuse,’ is mindboggling in what it says about the department’s disregard of fundamental legal principles,” he continued.

Rakoff’s statements echo the calls of many banking reform advocates who have charged that real accountability will only come when executives are prosecuted and sent to jail for illegal activity.

Rakoff’s comments, however, were not surprising given his history.


In 2011 Rakoff made what was described as a “historic” decision when he rejected a $285 million settlement the SEC sought with Citigroup because it was too lenient and would have blocked an “overriding public interest in knowing the truth.” His full ruling, Rolling Stone‘s Matt Taibbi wrote at the time, “read like a political document, serving not just as a rejection of this one deal but as a broad and unequivocal indictment of the regulatory system as a whole.”

In 2009, Rakoff rejected an SEC settlement with Bank of America.

As Mary Bottari then reported at PRWatch:

Noting that the banks had “effectively lied to their shareholders,” Jim Hightower wrote in 2009:


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