The collapse of New York-based Lehman Brothers in September 2008 triggered a financial crisis that threatened the very survival of the world's capital markets, and experts, journalists, politicians and everyday Americans reacted angrily in the aftermath when it became clear that not a single Wall Street executive would be prosecuted. Some pundits claimed that the lack of prosecutorial action was a sign that the whole financial system was rigged, but the federal prosecutor who led the Enron investigation believes that no fraud actually took place.
Samuel Buell says in his new book 'Capital Offenses" that investigators had plenty of suspicious Lehman transactions to look into, but none of them clearly crossed regulatory lines and all of them were approved by accounting or legal advisers. Buell argues that the insulation from liability that senior executives enjoy flows from the very essence of corporations, which he says were designed specifically to limit the personal exposure of the individuals involved.
Buell goes on to say that the packaging and selling of toxic assets that turned the crisis into a contagion was caused by a lack of oversight and regulatory failures rather than fraud. He argues that the losers in these deals were institutional investors and insurance companies that were well aware of the risks and should have exercised better judgement. Buell also points out that federal prosecutors generally prefer more sympathetic victims and like to see evidence proving that executives knowingly broke the law.
Experienced criminal defense attorneys may add that securing a conviction in cases involving alleged fraud can be challenging, and federal prosecutors may be reluctant to pursue cases when the evidence of wrongdoing is ambiguous. Defense attorneys could remind prosecutors that jury trials always involve a degree of uncertainty, and they may seek more lenient treatment for their clients by offering to settle these types of cases.