One thing is missing from this downturn that was present in so many previous downturns: the CFO perp walk. Post Worldcom and Enron, it was corporate officers who were hauled off to jail. In the 1980s in Europe it was crooked corporate bosses in companies such as Polly Peck and Guinness who were detained ‘at her majesty's pleasure'. But this downturn, CFOs can take a breather, for it is the bankers, financiers and hedge fund managers who are taking the heat.

In London this week, the FSA (the UK equivalent of the SEC) combined with the Serious Organized Crime Agency (SOCA) to arrest seven men in an insider dealing scam. The perps were bankers from Deutsche Bank and BNP's Exane unit, and a hedge fund investor from Moore Capital.

What seems apparent is that general public revulsion correlates to the criminal focus on the authorities. Bankers and hedgies are widely thought to have caused this crisis and so they are the ones taking the rap. Companies are seen to be as much the victims of rapacious bankers as are consumers with too many credit cards and houses worth half their mortgage.

The UK arrests mark a real upturn in the activities of the FSA in cracking down on financial crime, being the fifth such investigation since September 2008. All the previous four cases were against financiers too. The most recent case was that of Malcolm Calvert and ex-partner of the blue blooded stockbrokers Cazenove who was convicted last month to 21 months in jail for insider dealing.

This new focus on insider dealing is not restricted to Europe. In Hong Kong the local regulator, the SFC, has surprised many with its dogmatic pursuit of insider dealing. In Hong Kong this is more than a shift of emphasis but a total cultural change. (Indeed there is no real translation of the term insider trading in Cantonese, as all trading is assumed to be insider.) But again, the focus in Hong Kong has been on bankers and brokers, not on the companies they work with. On March 24^th, the SFC banned Ryan Fong from working in the securities industry for life, on top of a one-year prison term he received in July 2009 and a $1.3 million fine. Fong was an investor with HSZ and had received inside information from a friend who worked at the brokerage CLSA.

What conclusions can CFOs draw from this? Firstly, perhaps one can say that the rules brought in after the 2001 crash to reduce corporate malfeasance have actually worked. Dare one say it but perhaps Sarbanes Oxley has achieved what it set out to achieve, at least outside the US, where critics complain there has been a relative paucity of such prosecutions following the financial crisis. Still, one of the law's authors contends its effects may have kept the crisis from being even worse.

http://www.cfozone.com/index.php/Newsflash/Oxley-SarbOx-saved-the-financial-meltdown-from-being-worse.html

Secondly, authorities have been chastened by past experience and are really going after the people they think they can put away. In the UK, there were a string of failed prosecutions of corporate officers in the 1980s and 1990s by the Serious Fraud Office, whose ineptitude led it to being termed the Serious Farce Office. The SFO has now been replaced by the new SOCA agency and is largely going after financiers and leaving companies alone. Judging the public mood, they can be certain that juries will be keen to convict errant bankers.

The third take away - more of a conjecture than a conclusion - is something that many CFOs might agree with. Perhaps the bankers and hedge fund investors really are the crooks and criminals CFOs have long suspected them to be. Finally, in this narrative, the CFOs are the good guys.