The Balance Among Corporate Criminal Liability, Private Civil Suits, and Regulatory Enforcement

Abstract:     
Under federal law, corporations are vicariously liable for white-collar crimes when an agent of a firm commits a crime while acting within her authority for the benefit of the firm. This standard renders corporations vulnerable to criminal charges, leading to concerns about fairness and aggressive prosecutorial tactics. This essay suggests another reason for the exposure of firms to criminal indictment. The three-part system that encourages law-abiding business conduct is skewed toward criminal enforcement. First, congressional and judicial actions have made it difficult to sustain private civil suits that seek relief for securities fraud, and, second, regulatory enforcement has been weakened by inconsistent policies and inherent conflicts. Finally, the ambiguity and breadth of the federal fraud statutes facilitate charging agents in the first place – without providing guidance that would prevent unlawful conduct. Simply stated, the advantages of each piece of the enforcement system have been forfeited. To more effectively encourage law-abiding business practices, the balance among enforcement mechanisms should be restored. To that end, private suits should be reinstated, regulatory enforcement strengthened, and the federal fraud statutes reformed.

Number of Pages in PDF File: 28

Keywords: white collar crime, corporate liability, securities fraud, mail fraud, wire fraud, honest services fraud, administrative actions, regulatory enforcement, PLSRA, securities litigation, Securities & Exchange Commission, Black, overcriminalize

Accepted Paper Series