What Does It Take to Get a Banker to Perp Walk?

Thank you, Gretchen Morgenson, for regularly asking the right questions. I have complained before (most recently here and here) that bankers -- despite nearly imploding the US economy -- have never had to undergo an individual "perp walk" but have merely paid (at a corporate level) fines.

In the business section of Sunday's The New York Times, Morgenson asked, "How can we expect Wall Street's me-first culture to change when regulators won't pursue or even identify the me-firsters who are directly involved?" (full column, here)

In a settlement between the Securities and Exchange Commission and Citigroup, the bank has agreed to pay $180 million, mostly to investors, for a "disastrous" municipal bond deal that Citigroup "concocted and peddled" to wealthy investors from 2002 until 2008, which ended up losing said investors some $2 billion.

As is often the case in these settlements, the bank "neither admitted nor denied" the allegations. And the bank has already paid out over $700 million to compensate some of its investors for some of their losses. But....

The SEC case also comes more than seven years after the Citigroup investment strategy imploded. Unfortunately, six years is the time limit given to clients wishing to bring an arbitration case. So the facts laid out in the SEC's complaint against Citi are of no help to any investor who had not yet sued to recover from the bank.

Most disturbing, though, is the settlement's lack of accountability. As is all too common, Citigroup's shareholders are footing the $180 million bill associated with it. But they didn't devise the toxic bond strategy, sell it or hide its risks to investors. 

That was the work of Citi employees, as the SEC's order makes clear. Indeed, it contains chapter and verse about the crucial role played by the fund manager overseeing these investments. Some 50 references to actions taken by the fund manager and his staff are contained in the order.

What the SEC's order doesn't do, however, is name that fund manager. Morgenson has done her research, however, and does. That may embarrass that former Citi employee, but what I want to know is...

Why hasn't he been charged with anything?