You know the definition of chutzpah? The kid who kills his parents and then pleads for mercy because he is an orphan.

Well, the Securities and Exchange Commission frequently engages in a variation of this exercise. If, for example, it sues and subsequently fines an individual for illegal insider trading, it is not uncommon for the regulator to waive the fine, citing the person's inability to pay. This is no joke.

In a statement that feels like it should have been uttered a decade ago, the Securities and Exchange Commission's enforcement director Robert Khuzami said the regulator will focus on financial instruments such as derivatives as it widens its crackdown on insider trading by hedge funds, Bloomberg reported. 

"The days of insider-trading scrutiny being focused almost solely on the equity markets are now gone," Khuzami said on Monday at a legal conference on hedge-fund regulation.

That's an incredible statement since Wall Street has long since extended its interests beyond equity trading. There are many, many ways to make a bet on a company.