Three separate incidents last week involving the securities industry highlighted the disregard our country’s institutions have for the average American investor. Taken together, the events, a court ruling involving insider trading, a fine over investment bank misconduct and the roll back of laws made after the financial crisis to limit Wall Street’s reach, clearly show that investors in the United States remain second class citizens and far behind Wall Street.

Together, the three events deal major body blows to investors and are victories for Wall Street. First, a Federal Appeals Court made it easier to commit insider trading; FINRA, the Wall Street regulator, gave a slap on the wrist to ten Wall Street banks that offered favorable coverage to secure underwriting business; and Congress voted to roll back the little protections investors had under the Dodd-Frank legislation.

In a landmark ruling, the Federal Appeals Court in New York raised the bar for prosecutors on a crime that is already hard to prove and effectively limited the cases prosecutors can bring against insider traders, according to a Wall Street Journal  report. Remember, insider trading is the trading of a public company’s stock or bonds by people with access to private or non-public information about the company. Such trading gives unfair advantages to the insiders.

The Appeals Court decision is simply a road map for Wall Street to trade on inside information without violating the law.

“In a blow to the Justice Department’s Wall Street crackdown, a federal appeals court overturned two insider-trading convictions and ruled it isn’t always illegal to buy or sell stocks using inside information,” reported the WSJ’s Christopher Matthews. “The ruling raised the bar for prosecutors on a crime that is already hard to prove, and it will likely limit the types of cases the government can pursue.”

“Specifically, the three-judge panel of the Second U.S. Circuit Court of Appeals said prosecutors must prove traders knew that the person who provided an inside tip gained some sort of tangible reward for doing so,” according to Matthews. “The judges also said it may be legal to trade on inside information, even if it gives an investor an unfair advantage in the markets, as long as the tipper didn’t commit an illegal breach of his or her duty.”

In the case just overturned, two traders, Anthony Chiasson and Todd Newman, were convicted in 2012 on charges that they illegally traded Dell and Nvidia Corp. shares based on tips that originated with technology industry insiders. The two traders argued on appeal that the government should have been required to prove that they knew the insiders had received a “personal benefit” in exchange for disclosing the tips.

The Appeals Court not only agreed, but set new rules with a tough burden of proof for prosecuting “tippees” who provide the inside information. Under the new standard, prosecutors must “prove traders knew that the person who provided an inside tip gained some sort of tangible reward for doing so,” according to the WSJ report. The judges also said that it may be “legal to trade on inside information even if it gives an investor an unfair advantage in the market, as long as the tipper didn’t commit an illegal breach of his or her duty.”

This Court of Appeals ruling is a very dangerous precedent. Hedge Fund “tippees” and their “expert network” cohorts must be popping champagne all over Connecticut. Indeed, Stevie Cohen, the head of the now-defunct SAC Capital, who has been charged with “failure to supervise” traders who have been convicted of insider trading in a separate case, must also be rejoicing.

The ramifications of this decision will reverberate around the country. Prosecutors and investment fraud lawyers will have difficulty making cases against traders who are careful to hide their tracks or did not pay cash in exchange for their tips.

More significantly, this case will likely strike a sharp blow to investor confidence. Investors already believe that the market is a rigged game in which they have no chance in winning. Traders who have so-called special relationships with insiders at companies – but do not actually pay them for their tips – can now trade on inside information with impunity.

In another sharp jab to investors, FINRA gave Citigroup, Goldman Sachs and eight other securities firms a mere slap on the wrist collective fine of $43 million for the companies offering favorable stock research in the hopes of winning underwriting business in an IPO by Toys “R” Us, according to the Wall Street Journal. These practices were supposed to have been prohibited in a 2003 stock analyst settlement with regulators, which exposed e-mails showing how investment banks used their research department ratings to generate IPO business.

In some stunning e-mails revealed in the new Toys “R” Us case, a Citigroup analyst wrote: “I so want the bank to get this deal”. Another analyst wrote “I would crawl on broken glass dragging my exposed junk to get this deal.”

Clearly, nothing much has changed during the decade when sell-side analysts were supposed to be operating under new sets of rules.

Finally, Congress tried to slip into the $1.1 trillion government spending bill a provision paring back a Dodd-Frank requirement in the law for banks to “push out” some of their riskiest derivatives trading activities into affiliates that aren’t eligible for Federal back-stops.

Senator Elizabeth Warren seemed to be the only person in Congress taking a stand when she publicly urged Congress to withhold support for the spending until the derivative language was removed. According to the WSJ, Senator Warren railed: “We all need to stand and fight this give-away to the most powerful banks in the Country.” She also stated that the proposed change in the law would “permit the largest financial institutions to improve their profits by shoving more risk onto the American people.”

No, last week was not a good week for Mom and Pop investors. In fact, it was an awful week. As usual, Wall Street’s interest were put before those of the American investing public, which once again got the shaft, this time from the very institutions that are supposed to protect the little guy: the courts, the regulators and the Congress.

Zamansky LLC are investment and stock fraud attorneys  representing investors in federal and state litigation and arbitration against financial institutions.