NEW YORK (Real Money) -- Can you believe that the SEC worked for three years on a probe of Lehman Brothers and decided there was nothing there? No wrongdoing?Is it really possible to hide all of that debt, lie about it consistently and not have that be illegal? Is it possible that the main thing Lehman did wrong was simply have the market go against it and we can't prosecute people for being stupid? When I read this it reminded me a lot of the guys at AIG ( AIG), who also got away with blowing up the western world and didn't tell the truth about their positions or their leverage. I like prosecutors. I love the U.S. Attorney for the Southern District. That guy sees wrongdoing and he figures out how to punish people. The SEC sees wrongdoing and it shrugs.
The other day when we were talking about how Morgan Stanley ( MS) claimed that it was doing business as usual -- informing the big clients on the buy side to be careful because numbers were coming down Facebook ( FB) and letting the big guys sell more on the deal because of numbers coming down -- I had to marvel how people quickly defended that by saying the law says it is OK. I got bad news for anyone who knows how to deal with the legal system. It isn't up to the professors or the people who work at these banks to say it is OK. It is up to the prosecution.