Category Archives: Enforcement Policy

Deputy Attorney General Rod Rosenstein Keynote Address on Corporate Enforcement Policy

by Rod J. Rosenstein

NYU Program on Corporate Compliance & Enforcement Keynote AddressOctober 6, 2017

Thank you, Dean Morrison.  I appreciate your thoughtful introduction.  I am honored to be here with so many distinguished enforcement officials, corporate practitioners, and scholars from around the world.

One of my favorite management parables is about a child who watches her mother prepare a roast beef.  The mother cuts the ends off the roast before she puts it in the oven.  The child asks why. The mother says that she learned it from her mother. So the child asks her grandmother. The grandmother explains, “When your mother was a child, I cut the ends off because my pan was too small to fit the whole roast beef.”

The moral of the story is that the solutions of the past are not necessarily the right solutions today.  Circumstances change.  We should not blindly accept past practices.  We should be conscientious about reconsidering our assumptions. Continue reading

Do Compliance Officers Have A Growing Target On Their Backs?

by Patty P. Tehrani, Esq.

Have you noticed the number of articles and blogs covering the troubling trend of personal liability for compliance officers and Chief Compliance Officers (CCOs) in the financial services sector?  While anyone entering this industry knows it is highly regulated and replete with regulatory requirements, the growing liability of its compliance professionals is worrisome. Those responsible for overseeing their firm’s compliance program have many duties, and now more than ever find themselves on the receiving end of enforcement actions. This is evident in expanded corporate probes of compliance professionals or increasing regulatory expectations cited in speeches and proposed regulations.

Compliance professionals are concerned about facing personal liability especially when it is for non-rogue behavior.[1] As a result, I thought this trend warranted a closer review. Continue reading

How to Punish a Corporation: Insights from Social and Behavioral Science

by Benjamin van Rooij and Adam Fine

“Justice cannot mean a prison sentence for a teenager who steals a car, but nothing more than a sideways glance at a C.E.O. who quietly engineers the theft of billions of dollars,” wrote U.S. Senator Elizabeth Warren in a New York Times op-ed. When she calls for stronger action against corporate crime, she’s not alone. Calls resound, particularly on the political left. In 2015, the Department of Justice, under then-Deputy Attorney General Sally Q. Yates, issued a new policy prioritizing prosecuting corporate criminals.

Punishing corporate executives more strongly may be justified. Punishment rarely occurs, and, when it does, it is often too weak to constitute “justice.” But once we agree that more punishment is warranted, the next question is how we can make punishment more effective in preventing corporate crime? Continue reading

DeCoster v. United States: Testing the Limits of the Responsible Corporate Officer Doctrine

by Jason Driscoll
This post is the first part of a multi-part post by the author.

Over the last decade, the Food and Drug Administration and the Department of Justice have revived the use of the Responsible Corporate Officer (“RCO”) doctrine in an attempt to increase compliance with the Food, Drug, and Cosmetic Act (“FDCA”). Two recent cases—United States v. Purdue Frederick Co.[1] and United States v. Quality Egg, LLC[2]—illustrate the regulators’ new approach: impose strict criminal liability on individual corporate officers and seek enhanced sanctions in the name of effective deterrence. However, while the Supreme Court has upheld criminal fines premised on the RCO doctrine,[3] the Court has not yet opined on the legality of more serious penalties such as long-term debarment or imprisonment. The Court now has that opportunity. In DeCoster v. United States,[4] the Quality Egg defendants (Jack and Peter DeCoster) have filed cert. petitions asking the Court to review the lawfulness of their prison sentences and the RCO doctrine altogether. For anyone concerned about the expanding scope of corporate officer liability, this case could mark a turning point. Continue reading

Denials and Admissions in Civil Enforcement – Looking Beyond the SEC

by Verity Winship and Jennifer K. Robbennolt

Should agencies require admissions of guilt from the targets of civil enforcement?  The SEC’s policy of letting enforcement targets settle while neither admitting nor denying allegations provoked judicial rebukes and a public debate. But the SEC is only the tip of the iceberg. Administrative agencies rely heavily on settlement as a key enforcement tool.  Admissions of guilt—or, more commonly, declarations that nothing is admitted—form part of these settlement agreements and the underlying negotiations.

Our recent article, Admissions of Guilt in Civil Enforcement, uses the explicit debate over the SEC’s practices to draw attention to the high (and mostly unexamined) stakes of admissions for civil enforcement throughout the administrative system. Continue reading

Why the Securities and Exchange Commission’s Administrative Law Judges are Unconstitutional

by Linda D. Jellum

The Securities and Exchange Commission (SEC) faces a constitutional crisis: the Tenth Circuit recently held that SEC administrative law judges (ALJs) are unconstitutionally appointed.[1] And the D.C. Circuit will likely soon follow suit. So far, the SEC is fighting hard to protect thousands of past and pending SEC adjudications; however, the battle may well have been lost. Here’s the story of how the SEC’s greatest constitutional challenge unfolded. Continue reading

A New Model for SEC Enforcement: Producing Bold and Unrelenting Results

by Chair Mary Jo White

Introduction

Good morning and thank you, Dean [Trevor] Morrison for that very kind introduction. It is a pleasure to be here today and I want to thank the NYU Program on Corporate Compliance and Enforcement and the NYU Pollack Center for Law and Business for co-sponsoring this program. These programs provide important forums for sophisticated dialogue on critical white collar enforcement issues, which have an increased prominence post-financial crisis. I am honored to join your list of distinguished speakers.

Consistent with the core missions of these programs, I will talk to you today primarily about the SEC’s enforcement program, but also more broadly, about how best to punish and deter white-collar wrongdoing.As you know, the SEC is the primary regulator and enforcer of the federal securities laws. How we go about our job is thus critical to the protection of investors and the integrity of our capital markets. After nearly four years as Chair of the SEC, following almost nine years as U.S. Attorney for the Southern District of New York, where the criminal prosecution of white collar wrongdoing was – and still is – a major priority, this seemed like the right time to speak here about this important topic. And, as you might guess, after spending much of my career in law enforcement, I have strong views about the importance of strong enforcement in the white collar space and what it takes to achieve that. Continue reading

Comey’s Choice: Unprecedented Situation, Extraordinary Transparency

by Serina M. Vash 

FBI Director James Comey has come under intense scrutiny in the wake of his letter to Congress on October 28, 2016.  On its face, the October 28th letter was intended to supplement the Director’s prior testimony before Congress, which detailed the FBI’s decision not to recommend criminal charges against former Secretary Hillary Clinton in connection with her use of a personal email server.   But the timing of the correspondence and its incomplete content led to harsh rebuke from both sides of the aisle, accusations by lawmakers that Director Comey violated the Hatch Act and criticism by former DOJ prosecutors that the FBI Director broke from longstanding Department of Justice policy.

Federal law and DOJ policy are aimed at assuring that the work of federal employees is carried out with integrity and without regard to politics or political pressure. While criticism of the FBI Director’s decisions is unlikely to abate, a review of the record demonstrates that the FBI Director’s intent was to provide extraordinary transparency in what has been an unprecedented situation. Continue reading

The Yates Memo: The Promise and Reality A Year Later

by Walt Pavlo

Since the financial crisis of 2008, government prosecutors have come under fire for not prosecuting some of the top bank executives who, many say, were responsible for the financial crisis.   To remedy that perception, Assistant Attorney General Sally Quillian Yates announced the DOJ’s new policy on “Individual Accountability For Corporate Wrongdoing” (Yates Memo) last year.   Its purpose was to hold individuals accountable for bad (illegal) behavior rather than just have corporations pay big fines.  In effect, corporations would be tasked with serving up their former employees if they had done something wrong.  The DOJ wanted to put a face on the criminal misconduct both to: 1) deter corporate bad behavior and; 2) show the general public that individuals were not getting away with criminal acts without punishment.  We were all optimistic.  Continue reading

Department Releases Intake and Charging Policy for Computer Crime Matters

Courtesy of Assistant Attorney General Leslie R. Caldwell of the Criminal Division
Originally published on Justice Blogs – October 25, 2016

As computers play an ever-greater role in our lives and cybercrime becomes both more commonplace and more devastating, the need for robust criminal enforcement of effective computer crime laws will only become more important.  As we’ve said in public remarks last year, we urgently need targeted updates to the Computer Fraud and Abuse Act that will help the department protect our privacy and security online.  A number of recent prosecutions have demonstrated our commitment and success in bringing significant prosecutions under these vital statutes.  Prosecutors in U.S. Attorney’s Offices across the country, in conjunction with the Computer Crime and Intellectual Property Section (CCIPS) in Washington, have brought cases against hackers and carders like Roman Seleznev and Marcel Lazar and cyberstalkers and sextortionists like Ryan Vallee and Michael Ford, and have conducted challenging and cutting-edge cybercrime operations, such as the takedown of the Darkode hacking forum last year.

It is, of course, not enough to have effective laws; those laws must also be enforced responsibly and consistently.  Continue reading