An analysis by the New York Times has uncovered something interesting about an oft-required part of many civil settlements: The pledge by the company not to break securities laws in the future. These promises, however, are apparently mere words.

The Times has found that "nearly all of the biggest financial companies--Goldman Sachs, Morgan Stanley, JP Morgan Chase and Bank of America among them--have settled fraud cases by promising that they would never again violate an antifraud law, only to have the SEC conclude they did it again a few years later."

A Times analysis of enforcement actions during the past 15 years "found at least 51 cases in which the S.E.C. concluded that Wall Street firms had broken anti-fraud laws they had agreed never to breach. The 51 cases spanned 19 different firms."

Given that these promises are routinely violated you have to ask what's going on. It may be that the costs associated with committing crimes are just not prohibitive enough; civil settlements have become a mere cost of doing business. SEC officials maintain that it is more cost effective to allow these sorts of settlements, as going to court is risky and expensive. Still, there has to be a better way. An element of absurdity has crept into these settlements. No one fears them, and apparently there is no longer an industry stigma attached to them.

For more:
- here's the article

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