05/10/2007 04:02 pm ET | Updated May 25, 2011

Will SEC aid and abet Enron's "Banksters"?

With corporate crooks like Andy Fastow and Bernie Ebbers having traded in their pin stripes for wide stripes, one would imagine that the corporate crime wave is almost over and all the key culprits behind bars.

Think again.

For one, it appears that the major corporate accounting fraud cases aren't even over.

Just two weeks ago, former Computer Associates CEO Sanjay Kumar and CA's former head of worldwide sales, Stephen Richards, were indicted on charges of securities fraud conspiracy and obstruction of justice in what government officials called "a companywide accounting fraud scheme."

For another, there doesn't seem to be much interest in going after all the perps anymore. At least with criminal sanctions.

According to the Transactional Records Access Clearinghouse, enforcement data from the Justice Department suggest that white collar crime cases have reached their lowest level in the last five years.

It also appears that when it comes to the corporate crime, the perp walk game was designed to distract the public from any real solution. In most cases, they let a few bad apples rot behind bars for a few years (maybe more) while the criminal enterprise is itself left alone -- a policy known as using deferred prosecution agreements which, according to the Corporate Crime Reporter, were never intended to be used in these big cases.

The problem with this approach is that it doesn't get to the systemic root of the question.

Nor does it mean all the responsible individuals pay the price.

Take the Enron case. Although the count is up to 34 executives nabbed and convicted, not a one of the company's board was ever charged. Nor were any of the company's lawyers. In fact, so far, it looks like most of the aiders and abetters of the fraud (with the obvious exception of Arthur Andersen) have eluded the clutches of justice. Either criminal or civil.

You can blame Justice for not cracking down with criminal sanctions, but for civil penalties and restitution, the problem is mostly elsewhere -- the courts, the SEC, and even Congress. E.g. the aiders and abetters of fraud were aided and abetted by key tort reform laws passed in the late 1990s -- including the the Private Securities Litigation Reform Act (PSLRA), one of the biggest attacks on shareholder rights in recent memory, and arguably one of the biggest contributing reasons why the so-called "gatekeepers" failed to protect investors.

Probably the most obvious example besides the accountants is the bankers. Take Enron's bankers. They've mostly bought their way out of any trouble, even though they played a key role in the fraud.

As Senate investigators found, the big banks were the architects of many of the deals that were used to hide the company's debt, and ultimately brought the company down.

Carl Levin (D-Mich.), who led the investigation into the banks' role in Enron explained that "Citigroup and Chase...not only assisted Enron, they developed the deceptive pre-pays as a financial product and sold it to other companies as so-called balance sheet-friendly financing, earning millions of fees for themselves in the process."

In other words, Andy Fastow was no financial genius who engineered the complicated scams at the heart of the Enron deal, but rather the greedy sucker who bit when the banksters came and made their pitch.

Citi, JPMorgan Chase, and numerous other banks have coughed up a fraction of the $7.3 billion that so far has resulted from Enron-related civil litigation -- which in total amounts to less than a dime on the dollar compared to the $60 billion or so that shareholders and retirees lost.

Meanwhile, arguments in the ongoing case against the rest of the banks (including Merrill Lynch -- whose execs set up certain deals in which the two companies disguised a loan as a barge deal, flipping the money back and forth so that the company could meet certain revenue expectations and consequently, Enron execs could get their bonuses) were heard by the Supreme Court in March.

The case was thrown out by the 5th U.S. Circuit Court of Appeals -- an astonishing decision, given the findings of Levin's investigation. One of the judges in the case even admitted "that our ruling on legal merit may not coincide, particularly in the minds of aggrieved former Enron shareholders who have lost billions of dollars in a fraud they allege was aided and abetted by the defendants at bar, with notions of justice and fair play."

Still, like most things, it's not over until it's over. Which is why the defrauded investors -- clinging to the last shreds of hope -- came to DC yesterday to urge the SEC to weigh in on their behalf, as it presumably should under its mandate as the "investor's advocate."

Since there's been enough blame to go around, the banks have defended themselves by pointing their fingers elsewhere, especially at the other culprits who've already been fingered. Which is why they emphasize that they didn't prepare or approve Enron's financial statements.

As if that was the only fraudulent act that was committed.

The Supreme Court has yet to say whether it will review the case. And so far, the SEC is keeping mum.

The question is whether Chris Cox will stay mum until after Barney Frank holds the oversight hearing he announced his committee will hold next month. Frank says recent SEC actions have muzzled the agency's enforcement division and may make it harder for investors to sue companies. Which doesn't exactly augur well.

And Bloomberg reports that Cox has won new accolades from the Chamber of Commerce after trying to appear neutral.

Maybe they know something that Enron's defrauded investors don't.