On the 13th October, a New York federal jury will sit to hear, as the Financial Times puts it: the first and only criminal case against Wall Street executives to stem from the credit crisis.
Back in March 2008, Goldman Sachs stated that the credit crunch would cost USD1.2 trillion. At the end of July 2009, the International Monetary Fund estimated that governments across the world have committed around USD10 trillion to shore up banks.
Despite Wall Street being the epicenter of these losses, and home to the biggest casualties, only two of its members – former Bear Stearns hedge fund managers – will stand trial for fraud and insider trading.
Ralph Cioffi and Matthew Tannin were accused in 2008 of misleading investors in their hedge funds to the tune of USD1.6 billion. Cioffi is also charged with moving USD2 million of personal investment from the hedge funds without telling investors.
There have been cries of scapegoat by members of the financial industry, but this misses the point. If anything, there needs to be more members of the industry in the dock, because if Cioffi and Tannin were the only two men involved in criminal activity on Wall Street (laughably unlikely), then the industry got itself into such a mess through pure stupidity. Wall Street has to weigh up what is worse, harbouring criminals or being ignorant en masse.