What the Obama Justice Department, and particularly Preet Bharara, the U.S. attorney in Manhattan, have disregarded is that civil penalties just don't have any deterrent effect. They're like the fines that motorists pay after they've been caught speeding. But how would you feel if the state trooper aiming that radar gun might throw you in jail for a few nights? Bharara needs only to look to his office's actions against microcap crooks a decade ago as evidence of the educational impact of a nice period of incarceration.
Thanks largely to a determined pattern of criminal prosecutions, microcap stock fraud of the "boiler room" variety has largely become a thing of the past. Sure, technological advances were one factor -- Internet stock fraud, that is -- but jail terms were one of the major reasons you don't hear much about new First Jersey Securities and new Blinder Robinsons coming on the scene.
Even if incarceration didn't have a deterrent effect, it would be, quite simply, the right thing to do. It would be justice. Perhaps Eric Holder ought to stand out on Pennsylvania Avenue one of these days and take a look at the building where he works. There it is, on a plaque right at the front door: "Department of Justice." Wal-Mart has a long and dreary record of acting like a bully and getting away with it. A little dose of justice seems long overdue.
Gary Weiss's most recent book is AYN RAND NATION: The Hidden Struggle for America's Soul, published by St. Martin's Press.