The Department of Justice has brought few high-profile criminal cases against individuals arising from the 2008-2009 financial crisis. The department’s cases have tended to charge large financial institutions, not senior officials. A number of the high-profile cases arising from the collapse of mortgage-backed securities have resulted in civil, not criminal, charges and settlements. And the typical sanction has been the payment of substantial (often multi-billion dollar) sums to the government, not imprisonment.1
Amid criticism for what some have seen as insufficient zeal, the insider trading prosecutions brought in recent years in the Southern District of New York have stood out. These cases reached many different financial industry participants—company insiders, research networks, analysts and traders—and often led to charges against senior hedge fund officers. Hedge funds represent a powerful force in financial markets, and these investigations and prosecutions arguably took on outsized importance: These law enforcement efforts came to signify for many people the government’s efforts to punish wrongdoing in the financial industry and protect ordinary investors.
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