“He’s Wall Street’s ultimate comic-book villain – with his glowing bald head and marble eyes, he looks a little like Lex Luthor. But maybe the best comparison for famed hedge-fund shark and long-suspected insider-trading ringleader Steve Cohen is the Joker. Earlier this year, when the SEC extracted $616 million from Cohen’s fund in two regulatory settlements, he expressed his deep remorse by buying, within weeks, a $155 million Picasso and a $60 million beach house in the Hamptons, right down the road from his other Hamptons beach house, worth $18 million.

“It was a big fat middle finger to the government, flipped by a man who clearly thought he was getting away with a slap on the wrist, the way every other brazen Wall Street crook in the past half-decade has done so far.

“But in late July, Cohen was hit with two new major blows: a civil charge from the SEC and criminal charges filed by federal prosecutors against his firm, SAC Capital Advisors. The SEC charge, “failure to supervise,” looked at first like a relatively tame thing to lay on a suspected criminal mastermind, with a lifetime ban from the securities business being the worst possible outcome. But it was the first strike in what appears to be a surprisingly clever and aggressive government prosecution. Because the SEC filed its case through an administrative proceeding, not in civil court, Cohen will have limited rights to discovery, which would have helped him prepare his defense in any potential criminal cases.

“Just a few days later, in a neatly executed ballet, the FBI and the Justice Department dropped criminal fraud charges on SAC Capital and its affiliates. And charges against Cohen himself, the kind that could put him behind bars, may still be coming. “I think the feds are running the table on Cohen,” says Michael Bowe, a partner with New York law firm Kasowitz Benson Torres & Friedman, who has spent years chasing Cohen and SAC Capital in a racketeering suit. If Bowe is right and this turns out to be part of a tough, coordinated action against Cohen, the question will be: Does it matter? Does bagging a single hedge-fund slimeball make up for years of nonaction against more dangerous systemic corruption among the big banking powers?

“‘A pelt is not enough,’ says Dennis Kelleher of Better Markets, a group dedicated to Wall Street reform. ‘We need to see a pattern.’“

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