Evolution of Corporate Criminal Liability: Implications for Managers

Abstract:     
Until recently, most managers of publicly held corporations had little reason to worry about corporate criminal liability. Times have changed. Criminal activity puts public corporations at greater peril than previously. State and federal prosecutors are more willing to proceed against publicly held firms and their managers. Convicted corporations now face onerous criminal fines and civil penalties as well as intrusive government oversight and other nonmonetary sanctions. Managers also now are more responsible for the fate of their companies should a crime occur. In contrast to the traditional approach to corporate criminal liability - under which there was little managers could do to avoid a conviction or reduce the sanction once a crime was detected - under the modern approach, managers can take actions that fully or partially insulate a company from criminal liability for its employees' wrongs. Managers can protect their firms by responding proactively with programs designed to deter crime.

Managers of publicly held firms must understand the changing landscape of federal criminal law if they are to successfully respond to the challenges presented by potential wrongdoing by managers and other employees. This chapter discusses how managers can best respond to the evolving practice of corporate criminal liability. It highlights measures that managers can take to deter crime; it also discusses what managers can do to reduce potential sanctions for any crimes that are committed. Finally, the chapter discusses problems with the current system and pitfalls that arise for managers attempting to promote good corporate compliance.

Number of Pages in PDF File: 12

Accepted Paper Series