Declining Corporate Prosecutions

39 Pages Posted: 25 Apr 2019

Date Written: March 26, 2019

Abstract

Ten years ago, people across the U.S. protested that “too big to jail” banks were not held accountable after the financial crisis. Little has changed. Two years into the Trump Administration, newly collected data allows one to assess what impact a series of new policies have had on corporate enforcement. To provide a snapshot comparison, in its last 20 months, the Obama Administration levied $14.15 billion in total corporate penalties — with 71 financial institutions and 34 public companies prosecuted. During the Trump Administration, corporate penalties declined. During its first 20 months, there were $3.4 billion in total penalties, with 17 financial institutions and 13 public companies prosecuted. These trends build over time — in each year, blockbuster cases come and go, creating swings in fines. However, consistent with these data, this Article describes changes in written policy, practice, and informal statements from the Department of Justice that have cumulatively softened the federal approach to corporate criminals. This Article also describes continuity between administrations. A rise in corporate declinations, for example, represents a continuation of Obama Administration policy. A decline in use of corporate monitors similarly reflects prior policy. The steady and low level of individual charging in corporate cases, reflects an ongoing lack of success of efforts to prioritize individual prosecutions, exemplified by the 2015 “Yates Memo.” That policy, like others, has now been formally relaxed. This series of DOJ corporate prosecution policy changes have been accompanied by important institutional shifts. For example, high-level vacancies within the DOJ and other enforcement agencies may compromise ability to coordinate resolution of complex cases. This Article concludes by proposing structural changes, such as an independent corporate enforcement functions, to enhance capacity and prevent pendulum shifts in the administration of enforcement. How we handle corporate crime goes to the root of power imbalance in the economy that produced the financial crisis. Ten years gone, if we still have not learned the lessons of the last financial crisis, then the next one cannot be far ahead.

Suggested Citation

Garrett, Brandon L., Declining Corporate Prosecutions (March 26, 2019). American Criminal Law Review, Forthcoming; Duke Law School Public Law & Legal Theory Series No. 2019-25. Available at SSRN: https://ssrn.com/abstract=3360456

Brandon L. Garrett (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7090 (Phone)

HOME PAGE: http://www.brandonlgarrett.com/

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