Frontline documentary reveals a loophole in the prosecution of financial crimes

The Secular Jurist

By Robert A. Vella

Last night’s Frontline documentary, To Catch A Trader, reported on the current Justice Department investigations and prosecutions into insider trading activity at SAC Capital Advisors, L.P. – a hedge fund founded by Steven A. Cohen in 1992.

The documentary revealed a problematic loophole in the statutes regulating the financial industry.  Unlike the criminal laws that apply to most individuals and businesses in the U.S., there is apparently no provision for prosecution based on the charge of criminal negligence.  As a result, there is a higher burden of proof required for the prosecution of financial crimes since the threshold of intent must be established through evidence.  Frontline suggests this is the reason why Cohen has not yet been formally charged even though his hedge fund has already pleaded guilty to all counts in the indictment (securities fraud and wire fraud).

For comparison, BP pleaded guilty to…

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