Did the SEC let JPMorgan off the hook?

September 20, 2013, 5:12 PM UTC

FORTUNE — The Securities and Exchange Commission is taking a victory lap over Thursday’s JPMorgan Chase London Whale settlement. And it’s got a cheering section, something that has been relatively unusual for regulators in the wake of the financial crisis. The Wall Street Journal calls the settlement “historic,” and the Huffington Post says the settlement “amounts to a relatively stirring triumph of justice on Wall Street.”

What is this stirring triumph of justice? Along with getting the bank to pay $920 million — $200 million of which is being collected by the SEC — regulators got JPMorgan to admit it broke a law. But JPMorgan won’t say which one. And even if it did, the only ones the SEC is alleging have to do with keeping accurate books, not actually trying to defraud or trick anyone. Impressed?

Perhaps by the weak standard of justice for Wall Street crimes, you should be. The background: For years, the SEC allowed banks and bankers to pretend they did nothing wrong, even after agreeing to pay fines, sometimes quite large, to settle cases. “Neither admits nor denies” became standard in SEC settlements. This bothered people, especially in the wake of the financial crisis when it seemed clear to everyone that someone must have done something wrong.

MORE: JPMorgan Whale fine is excessive and political

So when Mary Jo White took over as the head of the SEC earlier this year, she vowed to change things. And here we are. The JPMorgan settlement is the second time the SEC has pushed for an admission of guilt. Hedge funder Phil Falcone also agreed that he had done something wrong when he settled with the SEC earlier this year.

But the question is, What are these admissions of guilt really worth? In its order against JPMorgan the SEC does say that the bank violated a number of its securities laws, but the list of those laws is not in the part of the document that JPMorgan agrees to. It’s up in the allegations section. The section of the document that contains the list of things that JPMorgan agrees it did doesn’t mention any particular laws, just an admission that the firm violated the rules and a list of facts, which generally say that a number of traders at the firm hid losses, and JPMorgan’s risk control folks and upper management missed it, even though the losses were basically poking them in the face.

A JPMorgan spokesperson declined to confirm what securities laws the firm had broken, or whether it would settle private lawsuits related to the London Whale incident, now that the bank has clearly admitted guilt. “At its core, today’s case is about transparency and accountability, and JPMorgan’s admissions are a key component in that message,” said Co-Director of the SEC’s Division of Enforcement George Canellos in a statement.

In fact, in JPMorgan’s admission there’s not a heck of a lot that will help shareholders who want to sue. JPMorgan doesn’t admit it tried to deceive anyone. Just that it missed something it should have. In most civil lawsuits you have to prove fraud. The SEC isn’t even alleging fraud here. What’s more, even under the old rules, companies still weren’t able to march into court and totally deny the facts of the settlements. It just allowed them to argue they didn’t break particular laws, something JPMorgan can still do.

“The policy shift is much to do about nothing,” says Thomas Gorman, a partner at law firm Dorsey and Whitney and a former SEC enforcement official. “And it has the possibility of taking more time and devoting more resources to get basically the same settlements, resources that could be used to pursue other important enforcement actions.”

MORE: Advice for JPMorgan: Split up

The Wall Street Journal even implies that JPMorgan (JPM) might have ended up paying less than it should have because it agreed to say it did something wrong. I would argue the opposite, that JPMorgan paid much more than is needed to, in exchange for being able to make the weakest admission of guilt as possible.

In the end, the whole SEC settlement with JPMorgan is kind of bizarre. The SEC is putting the $200 million JPMorgan is paying to settle the charges into a restitution fund for people who were harmed by the London Whale trading fiasco. Good luck finding them. (The rest of the settlement that is being collected by U.S. regulators is going back to the Treasury. Taxpayers, when will you stop being subsidized by the big banks?)

The London Whale wasn’t selling mortgage bonds or any other product to clients. He was a trader, who was trading, and eventually losing, JPMorgan’s own money.

Even saying JPMorgan’s shareholders lost money on the London Whale incident is a stretch. Shares of JPMorgan dropped nearly $4, or 10%, on the day after the loss was announced, and recovered within four months. The bank’s shares are now 29% higher than they were before the London Whale news broke. A number of the biggest pension funds in the world who are suing JPMorgan in a class-action suit related to the London Whale say they lost a collective $52 million, which is money, but these are the largest pension funds in the world. And what are pension funds doing trading in and out of the stock anyway, which is the only way they could have lost money?

You know who should really register a claim with the JPMorgan London Whale restitution fund: JPMorgan.