The Government's Prioritization of Information Over Sanction: Implications for Compliance
LAW & CONTEMPORARY PROBLEMS __ (2020) (FORTHCOMING)
34 Pages Posted: 29 Oct 2020
Date Written: October 27, 2020
Federal prosecutors and regulators—federal enforcers—within the United States are responsible for enforcing legal and regulatory requirements against corporations who engage in criminal and civil misconduct. When, however, federal enforcers fail to pursue the full range of sanctions, particularly the most severe, against an offending corporation, they are often perceived as unwilling enforcers. What if, however, there is another explanation for the federal government’s behavior in pursuing sanctions against corporations?
This Article argues that federal enforcers have, whether purposefully or not, adopted a model of enforcement that prioritizes gathering information from firms over levying significant sanctions against them. Instead of pursuing one of the traditional aims of punishment—retribution or deterrence—the government’s actions suggest that its priority is in ensuring that corporations disclose all relevant information of the corporation’s misconduct to the government. The question, of course, is, whether the information is worth it? Is the information gathered by the government worth the potential decreased deterrent effect of its more lenient enforcement policies as a result of its quest for full information and disclosure?
This Article considers these questions as related to efforts to incentivize firms to employ effective ethics and compliance programs, and determines that the government’s prioritization of information without a parallel commitment to use that information for the public’s benefit may be undermining compliance efforts. A primary incentive for a firm to create and implement an effective ethics and compliance program is the threat of sanction if they fail to do so. Yet, the government’s pursuit of information over sanction may threaten its ability to ensure effective ethics and compliance programs are created, implemented, and, perhaps most importantly, adhered to, because the government is not utilizing that information to (i) maximize the public’s benefit from the information or (ii) empower the types of public and private partnerships known to create lasting change within organizations. In short, if the government wants to prioritize information over sanction, it should do so in a manner that does not diminish its efforts to incentivize the compliance project.
Keywords: compliance, enforcement, corporate crime, corporate law, white collar crime
JEL Classification: K10 K14 K19 K20 K22 K40 K42
Suggested Citation: Suggested Citation