Federal officials are bringing far fewer prosecutions for fraudulent stock schemes than they did eight years ago, raising further questions about whether the Bush administration has been too lax in policing Wall Street, the New York Times reports. Experts say a loosening of enforcement measures, cutbacks at the Securities and Exchange Commission, and a shift in resources toward terrorism at the FBI have combined to make the federal government a paper tiger in securities crimes.
As a $50 billion Ponzi scheme that Bernard Madoff is accused of running is probed, federal officials are on pace this year to bring the fewest prosecutions for securities fraud since at least 1991, says the Transactional Records Access Clearinghouse at Syracuse University. There were 133 prosecutions for securities fraud in the first 11 months of this fiscal year. That is down from 437 cases in 2000 and from a high of 513 cases in 2002, when Wall Street scandals led to a crackdown on corporate crime. At the S.E.C., investigations that led to Justice Department prosecutions for securities fraud dropped from 69 in 2000 to just 9 in 2007, a decline of 87 percent.