Call it reverse accountability. In the wake of the financial crisis, the Securities and Exchange Commission has often been criticized for failing to charge any top executives when it sues a big institution. But one case stands out as an exception. In February the SEC announced it would settle fraud charges against Ralph Cioffi and Matthew Tannin, the former Bear Stearns hedge fund managers who oversaw a 2008 implosion of their funds that led to $1.6 billion in investor losses. In a deal that was announced on the day their civil trial was set to begin, the two men agreed to pay a total of $1.05 million. But their employer—Bear Stearns Asset Management, now owned by JPMorgan Chase & Co.—was never charged.
The SEC declined to explain this decision. This result can partly be understood when viewed in the context of the extraordinary events that led JPMorgan to acquire Bear Stearns at the government’s urging over a frenzied weekend in March 2008. But it still raises questions about how decisions get made at the agency.
