A disturbingly persistent pattern has emerged in U.S. Securities and Exchange Commission enforcement cases that involves three key elements: (1) The commission rarely sues individual defendants at large financial institutions, settling instead with the entity only; (2) when it does sue individual defendants, it frequently loses; and (3) the penalties collected by the commission from corporate defendants are declining and, in any event, are modest in proportion to the profits obtained.

Last month, the SEC sued and settled with JPMorgan Chase & Co. and Credit Suisse Group A.G. for a collective $417 million, but named no individual defendants. This continues a pattern under which the only senior executive at a truly major bank named as a defendant by the SEC in a case growing out of the 2008 crisis appears to be Angelo Mozilo, the former chief executive officer of Countrywide Financial Corp., who settled while under a threat of criminal indictment (which made going to a prior civil trial unthinkable). In sharp contrast, the Federal Housing Finance Agency (FHFA) also sued JPMorgan in a suit that similarly focused on the activities of Bear Stearns (which was acquired by JPMorgan) in packaging collateralized debt obligations (CDOs), and the FHFA named 42 individual defendants, including some high-ranking Bear Stearns executives. In a series of other cases against major banks, the FHFA has also sued a host of individual defendants.

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