Goldman Settlement Has One Loose End

NEW YORK (TheStreet) -- We have it from no better source than Mary Schapiro: The Securities and Exchange Commission is doing a whiz-bang job of rounding up wrongdoers in the financial crisis. In smug, self-congratulatory-to-the-point-of-delusion testimony before a House subcommittee the other day, Schapiro said the much-criticized Goldman Sachs(GS) settlement is not the end. Yes, sir, there will be other cases!

I'm looking forward to them. Since I expect the SEC to continue to behave like the SEC, and not miss an opportunity to miss an opportunity (hat tip: Abba Eban), I eagerly await the other scalps that we will soon be seeing on the Schapiro belt. Other cases mean other settlements, other wrists turned red from vigorous and self-congratulatory slapping, other companies offering up penalties they can easily afford, and admitting to the deep humiliation of having made "mistakes." Ooh! That must hurt. But when you consider that the biggest mistake of all was Barack Obama appointing Mary Schapiro to be chairperson of the SEC, all other mistakes pale in comparison.

What I don't understand is this: How can the SEC say with a straight face that it is avidly pursuing other malefactors in the financial crisis when it couldn't even get the Goldman extravaganza right?

Now, I'm not referring to the glaringly obvious question of whether Goldman was let off too easily. Both sides of that question have been eloquently expressed by two of my favorite financial commentators, with Barry Ritholtz taking the position that Goldman was appropriately punished, while Jeff Matthews set forth the case that Goldman was fined chump change.

Though I've seen it mentioned in one of the class actions against Goldman, what I'm not seeing in the debate over the Goldman victory, er, settlement is a less obvious issue. It arose briefly at the time the charges were filed in April, and was dealt with recently by only one commentator on my radar screen, my favorite white-collar crime blogger, Sam Antar of Crazy Eddie fame. Sam points out a gaping hole in the Goldman settlement: The famously "surprising" SEC lawsuit, which stunned investors and caused Goldman shares to plunge, was really no surprise at all. Even though Goldman co-general counsel Greg Palm told analysts at an April conference call that "nobody told us in advance," Goldman, in fact, had formal notice that charges were pending.