The housing bubble popped five years ago. The securitization market went haywire four years ago, shortly after the derivatives market started going crazy. Bear Stearns, choking on toxic CDOs, went down three years ago.

Today, March 4, 2011, we get this headline from Bloomberg:

CDO, CDS Fraud Probes to Be 2011 Priority, Prosecutor Says

This is great and all. But what have these guys been doing for the last five years besides prosecuting high-end prostitution services (sorry, I just watched Client-9, and you should too).

Here’s the lede:

U.S. criminal investigators will step up probes into possible fraud involving collateralized debt obligations and credit default swaps, a top federal prosecutor in New York said.

Christopher Garcia, chief of the Securities and Commodities Fraud Task Force in the U.S. Attorney’s Office in Manhattan, told white-collar criminal-defense lawyers at a conference today that his office will spend this year investigating possible fraud involving CDOs and CDSs.

Hey, what’s the statute of limitations on securities fraud, anyway?

Five years.

Clock’s ticking, Mr. Garcia.

And it’s ticking for everybody else, too. Boy, you look up and it’s already been four years this spring since the toxic securities markets dried up on Wall Street.

I’m no lawyer, obviously. Am I right that we’ve only got about one more year until everybody on Wall Street will be home free for good?

UPDATE: No, I was not right on that last question. Thanks to Padikiller for pointing out in comments that the five year statute of limitations is for civil cases. Criminal securities fraud has a ten-year limit.

But Mr. Garcia is with the SEC, which only prosecutes civil cases. The Department of Justice has shown little interest in prosecuting this stuff, with one notable exception and failure. So if Garcia wants to actually get money from anybody, he’d better get on the ball.

UPDATE: The first rule of corrections is: Don’t be stupid and have to correct your correction.

I just broke that one. Padikiller again points out that I’m wrong about Mr. Garcia. He is with the Securities and Commodities Fraud Task Force of the U.S. Attorney’s Office in Manhattan, not the SEC. So, the clock isn’t ticking on Garcia.

Apologies for the boneheaded mistakes.


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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.