<The SEC is toothless? Or maybe you mean corrupt?> All of the above, and you can add worthless as well.
The SEC can only engage in civil action. The SEC is supposed to turn criminal action over to the FBI, and in the Markopolos book about Madoff, the FBI didn't have kind things to say about the SEC.
What gets me about this whole financial crisis is that no one has been put away for this fraudulent behavior. The first thing the fraud perpetrator's do is blame the victim for being stupid. Stealing in the white collar world now is pretty much legal.