The New York Times has an excellent investigation today that shows in a new light how the SEC lets Wall Street off the hook despite repeated fraud.

Edward Wyatt reports that the SEC has given banks waivers 350 times in the last ten years that allow it to avoid “the full force of the law” supposed to govern what happens when laws are broken—penalties that are “specifically meant to apply to fraud cases.”

JPMorganChase, for example, has settled six fraud cases in the last 13 years, including one with a $228 million settlement last summer, but it has obtained at least 22 waivers, in part by arguing that it has “a strong record of compliance with securities laws.” Bank of America and Merrill Lynch, which merged in 2009, have settled 15 fraud cases and received at least 39 waivers.

What are these waivers? Exemptions that allow banks to continue to tap capital markets without delay (and government approval), to manage mutual funds, and to help small firms raise capital. They also continue to get certain protections from class-action lawsuits.

To put this coddling in context, recall Wyatt’s November story tallying how often the SEC let banks promise never again to violate a law they’d broken, break the law again, and then promise again never to break the law again. It turned out there were fifty-one recidivist cases over the past decade and a half.

So the question becomes: What does a bank have to do to not get a waiver?

The agency usually revokes the privileges when a case involves false or misleading statements about a company’s own business. It does not do so when the commission has charged a Wall Street firm with lying about, say, a specific mortgage security that it created and is selling to investors, a charge Goldman Sachs settled in 2010. Different parts of the company — corporate officers versus a sales force, for example — are responsible for different types of statements, officials say.

Of course, if you have one rogue broker or something, that’s one thing. But repeated violations alone are an indication that something’s wrong with a company’s culture, but when it’s pervasive wrongdoing, as we’ve seen in the housing bubble, and the consequences of that wrongdoing are so enormous, that’s something altogether different.

How it plays out is that lying to yourself is much worse than lying to others, in the eyes of the SEC. The logic is faulty, as a Times source points out:

JPMorgan received three waivers related to that case for privileges that it otherwise would have lost. But the S.E.C. said the company’s fraudulent actions didn’t involve misleading investors about JPMorgan’s business.

“That distinction doesn’t do it for me,” said Richard W. Painter, a corporate law professor at the University of Minnesota and the co-author of a casebook on securities litigation and enforcement. “If a company has trouble telling the truth to investors in one batch of securities it is underwriting, I would not have confidence that it would tell the truth to investors about its own securities.”

Good reporting.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.