Experts lay doubt on corporate crackdown
New policy fails to address key issues, applies to future cases
The Department of Justice’s new push to crack down on CEOs may be eliciting daydreams of perp walks, but experts warn it won’t happen any time soon.
In the hours Thursday after the DOJ vowed to hold more individuals responsible for corporate crimes, people started dropping names of heads they would like to see roll.
“Show us how serious you are by starting with Jon Corzine,” tweeted portfolio manager Jon Boorman, referring to the former governor of New Jersey who oversaw the collapse of commodity brokerage firm MF Global, which led to a scandal over improper money transfers from customers’ accounts.
But experts say CEO arrests won’t likely pick up any time soon — if ever. The concern is that the DOJ’s new policy, outlined in a memo to staff this week, does not address key issues that make prosecuting individuals tied to large corporations so difficult.
Deputy U.S. Attorney General Sally Quillian Yates this week outlined specific steps to hold individual corporate wrongdoers accountable. The new policy requires that corporations provide the DOJ “all relevant facts relating to the individuals responsible for the misconduct” or forgo any credit for cooperating. It also demands that DOJ officials “focus on individuals from the inception of the investigation,” rather than corporate wrongdoing.
Another reason the DOJ policy change won’t result in a plethora of CEO arrests is that it won’t apply to much of the wrongdoing that contributed to the financial crisis. Yates said the policy changes apply to “future investigations” and pending matters.
Attorney General Loretta Lynch also could have a limited window to implement the policy, depending on the 2016 presidential election.
“We may get a new attorney general,” says Brandon Garrett, law professor at the University of Virginia and author of Too Big to Jail: How Prosecutors Compromise with Corporations.