For instance, Jobs reportedly drove without a numbered license plate for many years. How did he accomplish this? Apparently, Jobs found a loophole in the law. In California, where Jobs’ car was registered, the law allows drivers with a new car to wait up to six months before getting a numbered plate.

Jobs’ solution was characteristically devious and brilliant; every six months he had the leasing company send him a brand new car. He returned the old car, which could now be sold used, perhaps now worth even more than a new car because the previous owner was the famous Steve Jobs.

Jobs’ solution to this problem, a solution the vast majority of us could never afford, exemplifies a problem well known in law enforcement. Sometimes the penalties for refusing to follow the law are so small they become trivial for the very rich.Consider this problem in the context of traffic tickets.Why should someone as rich as Steve Jobs be deterred from speeding if the only penalty is a small fine?

Sweden and Finland have solved this problem by charging traffic tickets based on the income of the driver.The more money you make, the more you pay if you are pulled over for speeding. One extreme example was a Swedish motorist caught traveling 180 miles per hour. He faced a maximum fine of more than $1 million, setting a new world record for the most expensive traffic ticket of all time.

To a multi-billionaire, even a $1 million fine is just spare change. One would imagine the fines would be higher for a more serious crime like financial fraud. Unfortunately, that is not the case.

In June, a federal judge reluctantly approved a settlement between the Securities and Exchange Commission and two former Bear Stearns executives. The executives, Ralph Cioffi and Matthew Tannin, ran two investment funds whose collapse is now believed to have at least in part triggered the financial crisis. 

The SEC’s lawsuit alleged Cioffi and Tannin lied to their investors about the true health of the funds, which allegedly contained risky mortgage-backed securities based on subprime loans that would later go bad. The lawsuit claimed both executives knew the mortgage market would eventually collapse, and with it, all bonds based on housing debt, but nonetheless steered investors toward the incredibly risky investments.

Investors in the former Bears’ funds reportedly lost more than $1.6 billion. But that was just the first domino to fall. Many economists believe these funds triggered the collapse of Bear Stearns and when that firm fell, the economy came apart at the seams.

If Cioffi and Tannin’s failed funds did lead to the recession, the collateral damage was immense. Consider the cost to taxpayers of the bailout of the financial sector and the personal suffering of millions of Americans who were laid off in the wake of the crisis.

One would think that kind of impact, if proven, would be worth more than a $1 million traffic ticket, especially since both Cioffi and Tannin are extremely wealthy former hedge fund managers who managed billions of dollars in assets.

Yet, the SEC ultimately filed a proposed settlement in the civil case against Cioffi and Tannin amounting to fines of $800,000 and $250,000 respectively. While $800,000 seems like a lot to most folks, it is pocket change to these defendants.

How does the SEC justify such a small settlement in a case with such wide-ranging impacts on investors and the general public? The unfortunate reality is that SEC prosecution does not have the teeth to demand large penalties.

In this case, the SEC could only legally ask for the defendants to fork over a small amount of money, a maximum of $2.75 million between the two men, based on specific actions the defendants took prior to the collapse of the doomed hedge funds. From that perspective, the settlement the SEC achieved doesn’t look quite so bad.

United States District Judge Frederic Block in NewYork was tasked with deciding whether to approve the SEC’s proposed settlement. He did approve it, but instead of the traditional analysis that is common in these cases, he handed down a 19-page order excoriating the defendants and criticizing the SEC’s weak enforcement powers.

The problem, Judge Block acknowledged, is that there is a massive gap between the small fine the SEC has the authority to levy against financial fraudsters and the actual damage financial fraud can have on investors and the broader economy.

The investors, who lost more than a billion dollars in this case, are left relying on private attorneys to take their case. Yet, as the judge notes in his order, “Congress has splaced obstacles in the path of such litigation,” particularly the Private Securities Litigation Reform Act of 1995. That law dramatically raised the standards for what attorneys must show at the opening stage of litigation and created roadblocks to the discovery of evidence that makes cases more difficult and time consuming to prosecute.

In short, Congress seems to have decided private securities attorneys are best equipped to recover funds for investors, but has placed roadblocks in the way that slowdown and sometimes even stop litigation.

In his order, Judge Block invited Congress to “consider whether more should be done by the government to come to the aid of the victims of Wall Street predators.” I could not agree more.

Dodd-Frank and Sarbanes Oxley were good steps in terms of regulating Wall Street’s excesses, and in particular, Dodd-Frank’s whistleblower program will help bring much more fraud to light. However, Congress would do well to focus more on the plight of investors, who often suffer extensive financial losses and face an uphill legal battle getting that money back.