Why there won't be Wall Street perp walks

NEW YORK (CNNMoney.com) -- Don't expect Wall Street to give up their tasseled loafers and French cuff dress shirts for orange jumpsuits anytime soon.

The Justice Department just abandoned its criminal probe against AIG, which means that executive Joseph Cassano, who once led the firm's troubled financial products division, won't face any charges.

Prosecutors have also yet to take any action against Lehman Brothers or other key players in the financial crisis despite pleas from some members of Congress for federal law enforcement officials to investigate the questionable accounting practices at Lehman leading up to its collapse.

At this point, the likelihood that bankers could face formal criminal charges, much less a conviction, is growing bleaker by the day, according to legal experts.

"I think it is a super long shot," said one former federal prosecutor, who could not officially comment on the matter out of fear it could harm her firm's ability to attract potential clients.

There has been no shortage of speculation about legal troubles facing many of the country's biggest financial firms recently.

Earlier this month, the Wall Street Journal reported that the Justice Department was expanding a criminal probe into whether big banks including Citigroup (C, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) misled investors about their role in sponsoring mortgage-bond deals.

Morgan Stanley (MS, Fortune 500) and rival Goldman Sachs (GS, Fortune 500), which is the subject of a civil-fraud suit from the Securities and Exchange Commission, have also been rumored to be facing similar investigations from federal authorities.

But legal experts said it's not likely that any of those reported investigations will lead to substantial charges against any Wall Street firm or individual bankers.

For starters, criminal cases are generally more difficult to win than civil trials. Prosecutors must be able to prove beyond a reasonable doubt that the company or its employees were guilty.

There is also the sheer complexity of these transactions, which often times involved a variety of participants dabbling in intricate investment products.

Many of the questionable mortgage-related investments, for example, were sold by banks, with the blessing of the ratings agencies, to highly-sophisticated investors such as other banks and hedge funds.

"It is going to be tough to show there was an intent to defraud anybody," said Paul Hayes, a former FBI investigator who served on the Justice Department's Enron task force and currently works for Milberg Investigators, an investor and consumer protection law firm.

Others have wondered just how willing federal law enforcement officials are to go after crimes related to the financial crisis.

It wasn't until after the SEC announced its civil fraud suit against Goldman Sachs that reports of a Justice Department probe of Wall Street's top firms surfaced.

Others have said it was curious that Merrill Lynch or its current owner Bank of America (BAC, Fortune 500), was not named in that same report. In both 2006 and 2007, Merrill Lynch was the leading underwriter of collateralized debt obligations, or CDOs, issuing some $85 billion worth of these mortgage investments.

"How can you have a serious criminal probe of this sector if you don't include the largest player?" said Rochdale Securities analyst Richard Bove, who tracks many of the top financial firms.

Of course, the Justice Department has not exactly fared well in prosecuting such cases.

Last fall, it lost the case it brought against two former Bear Stearns hedge fund managers despite having a damning series of emails between the two men. This is the only case tied to the 2008 Wall Street collapse that the DOJ has tried so far.

"They got spanked," said one former federal prosecutor. "I think prosecutors are going to have to be very careful and they will be. They don't want to be embarrassed."

Former law enforcement officials maintain that many of these cases may well remain fertile ground for other seemingly unrelated charges like wire fraud or additional instances of civil securities fraud against individual employees.

Legal experts unanimously agree however, that despite all the pressure top banks are facing these days, none of the firms themselves are likely to face formal criminal charges.

Prosecutors have backed away from the practice in recent years after criminal charges eventually led to the collapse of accounting firm Arthur Andersen. The company was eventually exonerated of all charges.

With securities firms so heavily reliant on client relationships, a criminal charge could very well lead to financial ruin for a top Wall Street bank, notes Bove.

"The punishment would be far more than the crime," he said. "The punishment would be excessive."