Fed Judge Rakoff Sees No Prosecution for Top Wall Street Execs (Update 1)

Updated from 1:17 p.m. EST to reflect comments of SEC and CFTC officials.

NEW YORK (TheStreet) -- Judge Jed S. Rakoff of the Federal District Court in Manhattan can't speak about the propriety of bank loans and securities issued during the housing bubble given pending or future litigation. However, he is ready to make definitive statements about a lack of criminal prosecutions against top-level Wall Street executives five years after the financial crisis.

The Department of Justice and Securities and Exchange Commission's reticence to bring charges against top executives of Wall Street firms is "technically and morally suspect," according to Rakoff. That is, if there was widespread fraud in the mortgage market, as many independent investigations such as the Financial Crisis Inquiry Commission and Senate banking committee investigations allege.

Judge Rakoff's comments, made at the New York Bar's Annual Securities Litigation & Enforcement Institute on Tuesday, aren't surprising. He was the judge that rejected a settlement between Citigroup (C) and the SEC as being too lenient and allowed a recent Bank of America (BAC) mortgage fraud case to go to trial.

What is surprising is that Rakoff is commenting on Wall Street prosecutions at all.

Rakoff cannot comment on matters surrounding mortgages originated during the housing bubble given an onslaught of current litigation levied against firms such as JPMorgan (JPM) and Bank of America. However, he believes he can now speak about a lack of criminal prosecutions against top Wall Street executives because there are no open cases and statutes of limitations on prosecutions have likely expired.

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