Tag Archives: Jennifer Arlen

PCCE Hosts Senior DOJ Officials for a Discussion of the Newly Announced Corporate Whistleblower Awards Pilot Program

PDAAG Nicole Argentieri. (All photos courtesy of Sam Hollenshead, NYU Photo Bureau)

On September 17, 2024, the NYU Law Program on Corporate Compliance and Enforcement (PCCE) hosted Nicole M. Argentieri, Principal Deputy Assistant Attorney General for the Criminal Division, Brent Wible, Chief Counselor for the Criminal Division, and Molly Moeser, Chief of the Money Laundering and Asset Recovery Section, as well as academics and distinguished counsel, for a discussion of the DOJ Criminal Division’s newly-announced Corporate Whistleblower Awards Program. A link to the details of the program is here. Below are the remarks delivered by PDAAG Argentieri. After Argentieri’s remarks, PCCE Faculty Director Jenifer Arlen led a fireside chat discussion with Brent Wible, followed by a moderated panel discussion that included Molly Moeser, Jane Norberg (Partner, Arnold & Porter Kaye Scholer LLP), Preston Pugh (Partner, Crowell & Moring LLP), Dan Richman (Professor, Columbia Law School), Max Rodriguez ’15 (Principal, Max Rodriguez Law PLCC), and Andrew Weissmann (Professor, NYU Law). Opening remarks were delivered by Troy McKenzie, Dean of NYU School of Law.

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Looking Back at Fall 2023 PCCE Events: CFTC Enforcement Director Announces Updates to the CFTC’s Enforcement Policies

As we prepare for a full schedule of events in 2024, starting with an event on Voluntary Self-Disclosure Policy for Export Controls Violations on January 16, 2024, the NYU School of Law Program on Corporate Compliance and Enforcement (PCCE) is taking a moment to reflect on our busy Fall 2023 program. In this post, we review our October 17, 2023 event featuring a corporate and individual enforcement policy announcement by the CFTC’s Director of Enforcement.

Ian McGinley, CFTC Director of Enforcement (©Myaskovsky: Courtesy of NYU Photo Bureau)

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Looking Back at Fall 2023 PCCE Events: 3rd Annual Directors’ Academy

As we begin to prepare for a full schedule of events in 2024, starting with an event on Voluntary Self-Disclosure Policy for Export Controls Violations on January 16, 2024, the NYU School of Law Program on Corporate Compliance and Enforcement (PCCE) is taking a moment to reflect on our busy Fall 2023 program. In this post: our third annual PCCE Directors’ Academy on September 21-22, 2023.

Keynote speaker Heather Lavallee, CEO, Voya Financial, Inc. (©Hollenshead: Courtesy of NYU Photo Bureau)

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Former CFTC Enforcement Officials Comment on the CFTC’s New Enforcement Advisory

Left to Right: Panelists David Meister, Douglas Yatter, Elizabeth Davis, Jennifer Arlen (moderator), and James McDonald (©Myaskovsky: Courtesy of NYU Photo Bureau)

On October 17, 2023, the NYU Law Program on Corporate Compliance and Enforcement (PCCE) hosted Ian McGinley, the Director of Enforcement for the Commodity Futures Trading Commission (CFTC), to announce updated enforcement guidance to CFTC staff on penalties, monitors, and admissions. Director McGinley’s remarks (available here) were followed by a fireside chat and moderated Q&A with questions from the audience, and later by a moderated panel of former CFTC enforcement directors and senior enforcement counsel. The updated staff guidance is available here. In this post, the panelists from the event offer additional commentary on the guidance.

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How Directors’ Oversight Duties and Liability under Caremark Are Evolving

by Jennifer Arlen

Corporate law prohibits companies from pursuing profits through criminal misconduct. It uses the fiduciary duties imposed on boards under the Caremark doctrine,[1] and the threat of personal liability of directors for deliberate breach, to help motivate directors to make sure their companies comply with the law. Yet Caremark has largely failed: Most boards have neither adopted effective systems to deter corporate crime nor asserted effective oversight over investigations. Caremark did not require directors to obtain information about material compliance failures or detected misconduct, information essential to effective oversight. To induce directors to deter misconduct – even when it is profitable – corporate law must impose duties on them to adopt systems that detect and inform them about the misconduct, thus triggering their duty to terminate it. Fortunately, Delaware courts appear to be modifying the Caremark standard to impose duties to detect and obtain information about certain material risks. If Delaware continues on this track, compliance and deterrence will benefit.

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Deterring Corporate Crime: Implications of Expressive Law and Empirical Psychology for Corporate and Individual Liability for Organizational Misconduct

by Jennifer Arlen and Lewis A. Kornhauser

In our forthcoming article, we develop a framework based on empirical evidence that identifies the optimal structure of corporate and individual liability when laws can deter through two channels: their ability to set social and ethical norms that express social condemnation (“expressive channels”), as well as through formal sanctions. We show that corporate liability is vital to the law’s ability to deter individuals from engaging in organizational misconduct through expressive channels. We also show that, in order to deter through either channel, governments must ensure that they reliably detect and sanction most individuals and companies who commit crime. Finally, we show why countries should not exempt companies from corporate liability based solely on their adoption of an ostensibly effective compliance program.

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Corporate Criminal Enforcement as a Defense to Companies’ Political Influence

by Jennifer Arlen

Countries around the world are reforming their laws governing corporate criminal liability. Jurisdictions and scholars arguing against broad corporate liability, often rely on the claim that corporate civil liability should be as effective as it can impose equally large sanctions on companies. Yet corporate liability is only effective when enforcement officials have the resources and political will to pursue large politically-influential corporations. In the U.S., effective deterrence thus requires that companies be subject to both criminal and civil liability for their organizational misconduct as federal civil enforcement is less effective than criminal enforcement because large companies can more easily leverage their influence with members of Congress or White House officials to blunt civil corporate enforcement. Civil enforcement also tends to be less committed to ensuring that individual wrongdoers are sanctioned. Continue reading →

For Those Seeking to Rival the United States at Corporate Criminal Enforcement: What You Should Know About the U.S. System’s Distinctive Roots

by Jennifer Arlen and Samuel W. Buell

The United States leads the rest of the world in successful corporate criminal enforcement actions against large multi-national firms, collecting enormous penalties and occupying center stage in the global enforcement arena. U.S. dominance draws its horsepower from two sources. The first, of course, is an extremely broad and easy-to-apply corporate liability rule, in the form of the respondeat superior doctrine. Under this rule, corporations are liable for all crimes committed by their employees in the scope of employment with some intent to benefit the firm. The second is the power granted to prosecutors to negotiate and settle cases, most often through deferred and non-prosecution agreements (DPAs and NPAs), by agreeing to reduce sanctions and to refrain from seeking conviction of firms that either discover and report crimes by their employees or fully cooperate by providing enforcers with the evidence needed to prove such offenses. Thus was born a system in which private business bears much of the cost of public enforcement, and in which—resource constraints aside—prosecutors are better able to police offenses committed in the uniquely opaque and complex setting of the large business firm.

This now familiar story oversimplifies how the U.S. system has enabled prosecutors to be so successful pursuing criminal cases against large corporations. An additional set of doctrines is vital to the success of the U.S. system of corporate criminal enforcement. Enforcement authorities cannot succeed without the ability to investigate complex corporate crimes by obtaining witness testimony, documents, and data. U.S. prosecutors have benefited greatly from their ability to shift the locus of investigation from the public to the private sector because, in the United States, in contrast to many other countries, a variety of laws—such as those governing self-incrimination, employee rights, legal privileges, and data privacy—enable private investigators to collect, and then provide to the government, evidence that government investigators could not so readily obtain themselves. Continue reading →

Negotiated Corporate Criminal Settlements: Bringing DPA Mandates Within the Rule of Law

by Jennifer Arlen

Countries around the world are beginning to embrace negotiated corporate criminal settlements, cognizant of U.S. federal prosecutors’ success in using deferred and non-prosecution agreements (hereinafter D/NPAs) to impose both substantial monetary sanctions and mandated reforms. Negotiated settlements, and the mandates they impose, can materially enhance governments’ ability to deter corporate crime when used effectively (Arlen and Kahan 2017).

Yet the existing U.S. approach to mandates needs to be reformed because it suffers from a material weakness: the Department of Justice provides less guidance and formal oversight over mandates imposed through D/NPAs than is required to ensure that prosecutorial authority over mandates is consistent with the Rule of Law.

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Assessing the Fraud Section’s FCPA Pilot Program

by Jennifer Arlen

The U.S. Department of Justice (DOJ) recently launched a new pilot program (PDF: 51 KB) designed to encourage more corporations to voluntarily report their own violations of the Foreign Corrupt Practices Act (FCPA), but the program does not go far enough to achieve its goals.

The pilot program is the first time that the DOJ has offered specific benefits to corporations that self-report that are unavailable to firms that fail to disclose detected wrongdoing and cooperate only when caught. This is an important reform. Yet closer examination reveals that the benefits detailed in the pilot program are not sufficient to lead corporations to disclose significant wrongdoing that will otherwise likely remain hidden. Continue reading →