The Failure of the Organizational Sentencing Guidelines

University of Miami Law Review (Symposium issue), Forthcoming

NYU Law and Economics Research Paper No. 11-21

43 Pages Posted: 4 Aug 2011 Last revised: 27 Jan 2012

See all articles by Jennifer Arlen

Jennifer Arlen

New York University School of Law; European Corporate Governance Institute (ECGI)

Date Written: August 2, 2011


In order to deter corporate crime, corporate sanctions must be structured to induce large corporations to help federal prosecutors detect and punish corporate crime. Specifically, firms must be encouraged to detect and report wrongdoing, and to cooperate with the government’s effort to identify and sanction the individuals responsible for the crime. Firms will not engage in these activities unless they face lower expected sanctions if they detect, report, and cooperate than if they do not. This Article examines whether the Organizational Sentencing Guidelines achieve this objective and shows that they do not. Although the Organizational Sentencing Guidelines offer sanction mitigation to firms that adopt effective compliance programs, self-report, and cooperate, this Article shows that these provisions offer too little mitigation to encourage firms to detect, report, and help prosecute the employees’ crimes. Indeed, the Guidelines’ mitigation provisions are particularly inadequate in the very circumstances where corporate detection and investigation is most important: in cases involving crimes committed by managers of large firms. As a result, U.S. efforts to deter corporate crime are undermined by adherence to the Organizational Sentencing Guidelines. This may partly explain why the Department of Justice adopted an alternative strategy for encouraging corporate reporting and cooperation, one that differs materially from the Organizational Guidelines. To help deter corporate crime, the Sentencing Commission should reform the Guidelines.

Suggested Citation

Arlen, Jennifer, The Failure of the Organizational Sentencing Guidelines (August 2, 2011). University of Miami Law Review (Symposium issue), Forthcoming, NYU Law and Economics Research Paper No. 11-21, Available at SSRN: or

Jennifer Arlen (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

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European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
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1000 Brussels

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