"What do I care about the law. Ain't I got the power?" steel magnate Frederick Vanderbilt once said. As Americans watch an array of equally arrogant, next-generation robber barons being led away in handcuffs, scorned investors are speculating on who will be arrested next. Meanwhile, it's D-Day for big firms to recertify their number-crunching, and
new math problems are surfacing. But the road from aggressive accounting to criminal fraud can be a tough one to navigate. If the Securities and Exchange Commission requires a team of investigators and months to determine the severity of a violation, how can individual investors be expected to determine the difference between, say, the bad-but-not-criminal issues unearthed so far at AOL Time Warner ( AOL) and the almost-laughable criminal shenanigans of Adelphia executives? Good question. Those distinctions are tough for retail investors to suss out before the whip comes down. What will help stem unnecessary panic-selling of many stocks, however, is a better understanding of how regulators and the Justice Department tackle these issues.