ALL BUSINESS: How Tough Is the SEC?

The government appears to be getting tough on corporate shenanigans, securing $83 million in fines last week from Bank of America and General Electric for misleading investors.

FILE - In this June 22, 2009 file photo, Securities and Exchange Commission Chair Mary Schapiro...

FILE - In this June 22, 2009 file photo, Securities and Exchange Commission Chair Mary Schapiro testifies on Capitol Hill in Washington. Schapiro on Tuesday, Aug. 4 said in a statement that the agency is working to create a rule to ban the trades known as flash orders. (AP Photo/Susan Walsh, file)

(AP)

Problem is, it's like a traffic cop ticketing a speeding car instead of its driver.

No one at Bank of America or GE has been ordered to pay for their misdeeds. If the Securities and Exchange Commission is serious about cracking down on illegal behavior, the people — not just companies — must be held accountable.

"If the SEC really wants to regain its title of top cop, then it will have to prosecute individuals involved," said Thomas Gorman, who chairs the securities litigation practice at the law firm Porter Wright Morris & Arthur and is author of the blog, SECactions.com. "Big fines (at companies) won't stop bad behavior."

To be sure, any action — even if it targets companies instead of people — is a step forward for the SEC. Over the last year, it has been rightfully criticized for failing to spot major frauds, including Bernie Madoff's Ponzi scheme, and warnings signs leading up to the financial crisis.

Since Chairman Mary Schapiro took over in late January, the agency has been on a tear. Since then, its enforcement division has opened about 525 investigations, up from 475 during the same period in 2008.

During a June congressional appearance, Schapiro said that the "SEC needs to send a clear message that corporate wrongdoing will not be tolerated, and penalties for securities violations will be stiff."

But to keep her word, the SEC must not only extract settlements out of companies but also individuals responsible for corporate misdeeds. That's fairest to shareholders, who get stuck with the bill for corporate fines even though they've often been hurt the most by corporate misconduct.

"Entities don't do bad stuff. People do bad stuff," said Lynn Turner, former chief accountant for the SEC in the late 1990s who is now a senior adviser to LECG, a legal, economic and forensic accounting firm. "To stop that, people need to know the SEC is going to come down on them like a ton of bricks."