Last week, the White House, reacting to the Supreme Court’s June 21, 2018 decision in Lucia v. SEC, issued an Executive Order exempting Administrative Law Judges, or ALJs, from the competitive civil service. This post considers what the order might mean for the Securities and Exchange Commission and other agencies that use ALJs to adjudicate enforcement cases. Lucia held that the SEC’s ALJs are “officers” subject to the Constitution’s Appointments Clause, which means they have to be appointed by (as relevant here) the head of the agency – that is, the SEC’s Commissioners. Previously ALJs were hired through an examination-based process handled by the Office of Personnel Management, or OPM (effectively the human resources department of the federal government). OPM typically presented an agency with a list of eligible candidates ranked on the basis of the examination, among other things, and the agency selected an ALJ from among the top three candidates on the list. Continue reading
Corporate misconduct allegations often result in investigations by multiple agencies, including foreign, federal, state, and local authorities. Without proper coordination, companies risk being hit with duplicative penalties for the same misconduct. Duplicative corporate penalties can be avoided, but coordinating a corporate resolution with multiple authorities is hard to navigate.
Within the United States, federal prosecutors often have overlapping jurisdiction with other federal criminal and civil prosecutors, federal and state regulators, and local prosecutors. In international investigations, federal prosecutors also have to cooperate with foreign authorities with overlapping jurisdiction. All of these players can have a legitimate interest in protecting the public from economic crimes. Regulatory competition, however, often leads government authorities to want to take the lead over other authorities. Other times, government authorities jump from the sidelines onto the field of play when a corporate resolution is near and refuse to leave the field without a share of the penalties. A coordinated resolution is difficult to achieve in either case. In the end, the overlapping jurisdiction and regulatory competition can either lead to (1) each authority “piling on” their share of penalties or (2) a coordinated resolution that identifies the collective harm caused by the company’s misconduct, the appropriate penalties for that harm, and the fair allocation of the penalties among the interested government players. Continue reading
On October 25, 2017, the United Kingdom Supreme Court issued a fascinating and potentially groundbreaking opinion (PDF: 357 KB), in a civil suit for contract breach called Ivey v. Genting Casinos (UK) Ltd. As this post will explain, the UK Supreme Court refined a major component of English law of white-collar crime, while purporting to relegate that component to the dustbin.
The central problem in the substantive criminal law of white-collar offenses—an issue I have pursued in much of my scholarship (here, here, here, and here, for example)—is how the law draws lines between seriously morally wrongful business practices and those that are acceptable, even if, in hindsight, regrettably unwelcome. The perennial challenge is to draw lines that are sufficiently clear to warn potential wrongdoers of criminal sanctions and that mark out only serious wrongdoers for imprisonment, while crafting those lines to be sufficiently broad and flexible to apply, and thus be effective, in an ever accelerating and more complex industrial world. Continue reading