THE current range of opinion on the Securities and Exchange Commission’s $550 million settlement in the Goldman Sachs fraud suit lines up closely with that evoked by previous S.E.C. settlements with corporate defendants. Some Americans are outraged that Goldman “got off easy,” while others feel the deal could be a model for gaining some measure of justice against those responsible for Wall Street’s meltdown.

Both sides are wrong: at best, such agreements reflect case-specific facts and circumstances; at worst, they are nearly arbitrary. While the government often claims such high-profile deals are of historic significance, they typically have little effect on future cases and do nothing to resolve long-standing conflicts as to how the law should treat misconduct by...