SAC Capital Is Finally Busted

NEW YORK ( TheStreet) -- If you don't like cops, then the next time you're in trouble call a hippie.

My dad used to say that, back in the 1970s. He was a small businessman, and back then, businessmen were staunch defenders of law and order.

But in the run-up to SAC Capital Advisors' guilty plea on charges of insider trading, I got the distinct impression that some on Wall Street didn't want the cops involved.

That has been a nagging feeling of mine throughout the last few years, as charges have rolled on against JPMorgan Chase ( JPM), Bank of America ( BAC) and others, including Cohen. There's an idea that Wall Street bankers should be thanked for agreeing to rescue the very institutions they almost destroyed and treated as idols regardless of how they became wealthy.

That's not the way I was taught, by my dad or by anyone else.

I was taught that fiduciary responsibility meant something. It meant that you avoided breaking not only the written law, but also a host of unwritten laws and ethical rules, that you treated the client's money as you would treat your own, not as if it were your own to spend, but as if it were your nest egg to protect.

I was taught this is why the U.S. financial markets are the biggest in the world. Because they're the best run. Because they have the highest accounting standards. Because there are cops in the suites to deter crooked dealings.

John Cassidy of The New Yorker says that Cohen "paid-off" the government with a $1.8 billion fine , but that's not entirely accurate.

There remains an active Securities and Exchange Commission investigation. Two SAC employees will soon go on trial and may testify against Cohen. A criminal case of insider trading could still be lodged against Steven Cohen, personally.

The agreement will damage the business of SAC Capital, once one of the giants among Wall Street hedge funds, and although Cohen himself will retain a significant fortune, that's bound to be whittled away in the litigation to come.

No plea deal is perfect for the prosecutor. That's why it's called a deal. But we're dealing here, the government alleges, with a conspiracy. Every deal in a conspiracy case peels away some layer of the conspiracy onion. It brings new facts to light, leads to the exposure of more conspirators, and may lead to more cooperation by conspirators.

What upsets Cohen's friends and associates may be that he's being treated in this more like a Mafia don than a scion of Greenwich. On the other hand, the law is the law, and how different is perverting the law through insider knowledge, illegally obtained, from pumping a few bullets into Danny Walnuts?

There are, after all, victims here. Everyone who traded stock in a company SAC manipulated and who played by the rules was a victim. Everyone doing business honestly, in the stock market, was a victim. Every investor who should be in the market today but isn't because he assumes the game is rigged is a victim.

Each year Gallup asks people whether they're invested in the stock market. This year, the figure is down to 52%. In 2009 it was 57%. By that time the losses from the 2008 crash had been shaken out. Yet 5% of Americans have since missed a move that could have doubled their money.

I'd say those people are victims, too. Don't call insider trading a victimless crime. It's a crime, just like plugging bullets into Danny Walnuts is a crime.

And we will have turned a corner when we start to understand that, in the end, Steven Cohen may have been no different, and no better, than a Mafia don.

If you don't like cops, then the next time you're in trouble call a broker.

At the time of publication, the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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