What do departments/universities do about unethical behavior by faculty?
The main problem as I have experienced it is hearsay vs. facts. By hearsay, I mean rumours or coffee-table talk and the like. The university and departments can do a lot but not on hearsay. I know of one case where all PhD students finish and then distance themselves for life to the advisor. If one of them had made a formal complaint, things would have been easy but no-one has. In this case the department has behind the scenes "decided" not to grant the person any more graduate students. I am sure many who read this can see that it is highly unsatisfactory "punishment" since it is all happening behind the scenes, but without official complaints there are no other ways to go.

To widen the perspective a little. When it comes to discrimination due to sex and  ethnicity the situation is different, there not much is needed for action. A person can be unfairly branded by almost anything regardless if any evidence exist (such as a student unsatisfied with grades and eager for revenge accuses someone for -ism). In such cases, we, rightly, have the approach no smoke without a fire. Unfortunately the other types of misbehaviours are not generally acknowledged as problems of similar dignity and so a wealth of hard evidence is required and lost of benefit of doubt exists in the process.

So although much can be done, many cases go on for long periods due to lack of hard facts. Sometimes problems are taken care of behind the scenes but these cases can drag on for very long periods. The fact that they are handled behind the scenes does not carry legal certainty and can be a problem by themselves. So clearly problems exist but the processes of "pressing charges" are unclear and uncertain. So to cap off, it is a legally tricky situation where anything but an open process carries unsatisfactory issues.