FORTUNE -- Justice continues to come with slightly less pain for Wall Streeters.
The most recent evidence of this phenomenon comes from the government's prosecution of hedge-fund billionaire Steven Cohen. Earlier this month, Cohen's firm SAC Capital pled guilty to insider trading charges. U.S. prosecutors have called SAC a criminal enterprise, and the firm is paying the largest fine related to insider trading in history.
Yet, at the same time, the government is trying to bar individuals who may have been harmed by the hedge fund's insider trades from using the evidence the government uncovered against the firm. At a recent hearing about the plea deal, the Justice Department argued that individuals who lost money in the same two stocks at the same time that Justice Department says SAC benefited from insider trading should not be considered victims. What's more, the Justice Department's plea deal with SAC does not include any admission of guilt for any particular trades, just that it broke the rules in general. Jury selection in a case against a former SAC trader accused of insider trading started on Tuesday.
The SAC case is the latest in a series of government crackdowns that gives the government something to brag about but seemingly does little for anyone else. For instance, back in September, the Securities and Exchange Commission in its settlement with JPMorgan Chase (JPM) over the London Whale trading mishap got the bank to admit that it was guilty of basically missing something it shouldn't have. The bank did not admit to defrauding anyone. It also did not admit that top executives knew the risky trades were going on, and that large losses had occurred, which is something other investigators have alleged.
The result: There was almost nothing in the settlement that would help JPMorgan shareholders who are suing, saying they are misled. The same was true of the admission of guilt the SEC got this past summer for hedge funder Phil Falcone.
A similar situation popped up in the Justice Department's $13 billion settlement with JPMorgan on Tuesday. Once again the language contained in the settlement was vague enough that it seemed JPMorgan would be able to claim it did nothing wrong in future suits ecen on the same deals. Part of the settlement has to do with Washington Mutual, which JPMorgan bought in 2008. As part of the settlement, JPMorgan agreed that an FDIC trust set up to handle some WaMu losses was not responsible for the mortgage losses JPMorgan inherited from WaMu. But the government won't stop the bank from continuing to claim in court that the FDIC, and not JPMorgan, should still be responsible for other investors' losses in the same bonds.
"They are a little bit too cute," Mary Schapiro, the former head of the SEC, told me recently, referencing the guilty pleas the government has been receiving, although Schapiro wasn't talking about SAC specifically.
In the case of SAC, the Justice Department says federal law prohibits it from forcing SAC to admit it wronged individual investors. But a judge seems to disagree, or at least isn't sure. The judge who has to approve the settlement put off ruling on it until March, following objections from the lawyers who are representing individuals who lost money in drug companies Elan and Wyeth, the two stocks that are at the heart of the government's SAC trading case.
Instead, the Justice Department in its court document argued that the people who lost money are not considered victims just because they weren't able to make the same illegal profits as SAC. Yes, other investors would have gained if SAC didn't. The market is zero sum. But those other investors' profits, or lack of losses, would have just been by accident. Unlike SAC, those investors didn't have insider information.
So who is the victim of SAC's criminal enterprise? The government's answer: The market. But what is the market? It's all of us, buying and selling stocks or mutual funds and pension fund managers on our behalf.
Not sure how you can damage the market without damaging the rest of us.
Why is the Justice Department fighting the bank just so it can hand a pile of money to hedge funds?
FORTUNE -- The Justice Department's proposed $13 billion settlement with JPMorgan Chase over mortgage misdeeds has stalled, and the issue appears to be this: Who should pay for WaMu's poo?
The Justice Department says JPMorgan (JPM). JPMorgan says an FDIC trust. The correct answer may not be the one you think.
Here are MOREStephen Gandel, senior editor - Oct 31, 2013 1:58 PM ET
Did Jamie Dimon just make another mistake in JPMorgan's legal battles?
FORTUNE -- On Friday, JPMorgan said that it had put aside $23 billion to cover future fines and legal bills. Even beyond the size, the disclosure was an unusual one. Banks don't typically say how much they have to cover legal bills. And it's the first time that JPMorgan has ever disclosed the number.
Bank executives have long said they won't MOREStephen Gandel, senior editor - Oct 11, 2013 2:36 PM ET
Banker doesn't believe rising rates will put a damper on new leveraged buyouts.
FORTUNE -- Jim Casey, co-head of debt capital markets at JP Morgan Chase & Co. (JPM), said on CNBC today that there is enough "market depth" to help finance future leveraged buyouts.
The comments come in the midst of a particularly slow quarter for new private equity deals, during which firms have taken preferred to spend their time refinancing MOREDan Primack - Jun 26, 2013 3:49 PM ET
A year ago CEO Jamie Dimon was still talking growth for his mega-bank.
Update: 2/27/13, 10:30 AM.
FORTUNE -- An encounter with a whale can really change a fella.
A year ago, at JPMorgan's investor day, CEO Jamie Dimon said he believed his mega-bank was still too small. He said his firm would continue hiring and opening branches, even as the economy remained slow.
This year, it appears Dimon's tune has changed.
JPMorgan Chase (JPM) MOREStephen Gandel, senior editor - Feb 26, 2013 12:28 PM ET
The bank's bad bet could curtail profits for years to come.
Update May 13, 11:00 PM
FORTUNE -- For years, JPMorgan Chase (JPM), perhaps the riskiest bank in the world, got a pass. Sure there were minor hiccups along the way. But basically investors had the attitude with the bank run by Jamie Dimon that they were going to be hands off. Sub-prime mortgage loans: You've proved you can handle them. Foreclosure MOREStephen Gandel, senior editor - May 11, 2012 2:02 PM ET
JP Morgan CEO Jamie Dimon strenuously denied that a trader's positions may have been problematic before he had investigated it. His bravado backfired.
By Roger Ehrenberg, contributor
FORTUNE -- With the web afire with criticism over JP Morgan's recently announced (and unexpected) $2 billion trading loss, a few "life lessons" came to mind as to how Jamie Dimon - and his PR department - bungled this badly:
Know the facts before taking a MOREMay 11, 2012 11:29 AM ET
Do we have a credit-card robosigning scandal on our hands?
A report Friday suggests that the banks' contemptible failure to maintain proper records– exposed during the foreclosure scandals of the past year – hasn't been limited to their boom-and-bust mortgage businesses.
JPMorgan Chase (JPM) has dropped more than a thousand debt-collection suits aimed at people who defaulted on their credit cards, the Wall Street Journal reports. The decision to drop some suits in five MOREColin Barr - Jun 24, 2011 9:59 AM ET
The government took another whack at the banks Tuesday, but individual bankers continue to skate by unscathed.
The Securities and Exchange Commission scored a $154 million settlement with JPMorgan Chase (JPM) over its misleading bond-sales practices during the bubble.
In a replay of the Abacus case against Goldman Sachs (GS), the SEC charged JPMorgan Chase with admitting* it misled investors by failing to mention that the securities they were buying were being MOREColin Barr - Jun 21, 2011 3:51 PM ET
JPMorgan Chase said Heidi Miller, one of the top women in banking and a longtime ally of CEO Jamie Dimon, will retire early next year.
The announcement comes just a year after Dimon tapped Miller (right) to head the No. 2 U.S. bank's international push. Dimon said last June that creating that job would "augment -- not replace -- business lines around the world, helping them accelerate and prioritize their efforts and MOREColin Barr - Jun 14, 2011 5:09 PM ET
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