Why it is Getting Harder to Prosecute Executives for Corporate Misconduct

Abstract

In September 2015, the Department of Justice announced a new policy to pursue individuals involved in corporate criminal violations by conditioning any benefit for cooperation on the company identifying culpable executives. The policy, known as the Yates Memo and named after the then-Deputy Attorney General, was heralded as a real change in how federal prosecutors would pursue organizational crime. Does the shift to emphasizing individual culpability mean there will be an upsurge of prosecutions of corporate executives who oversee companies that engage in misconduct? The short answer is no. This essay, delivered as part of a symposium at Vermont Law School, considers why the policy will likely have little real impact. One reason is that the new — or perhaps renewed — emphasis on pursuing individuals is not a real change in the Department of Justice’s policy. More importantly, as companies get larger, there is a shrinking chance someone from the C-suite will have had any actual involvement in day-to-day decisions that provide the fodder for an individual prosecution. It appears that mid-level managers will have to bear the brunt of the focus on individual liability for corporate misconduct. As a response to criticism about the lack of individual prosecutions related to the financial crisis, the Yates Memo may end up being more a public relations effort than something that will produce tangible results through increased prosecution of management.