The Road Not Taken: The Elusive Path to Criminal Prosecution for White-Collar Offenders

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Abstract
In the control of stock fraud, criminal prosecution is the road not taken: only six of every hundred parties investigated by the Securities and Exchange Commission ultimately stand in judgment before a criminal court. This paper examines the role of criminal prosecution in controlling securities violations. It traces the SEC enforcement process in which most stock swindlers are diverted from criminal prosecution and treated civilly or administratively or spared legal action entirely. It finds that the criminal process attracts the most significant offenses, but also those about which little else can be done. In this light, the paper reconsiders the controversial finding that upper status white-collar offenders fare no better and often worse than their lower status counterparts at criminal sentencing. It finds a double standard, but one with some surprising implications.

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