DoJ revising policy on US white-collar crime prosecutions - Financial Times

The US Department of Justice is revising its policy on prosecuting white-collar crime, calling into question its commitment to the Obama administration’s approach to charging individual executives.

Department attorneys are considering changing the official guidance for prosecutors and are likely to make an announcement “in the near future”, according to Rod Rosenstein, deputy attorney-general.

Mr Rosenstein provided no details of the possible policy shift and a department spokesman refused to elaborate. The deputy attorney-general’s remarks at the Heritage Foundation in Washington, however, hinted at limited changes.

“Corporations, of course, don’t go to prison. They do pay fines. The issue is: can you effectively deter corporate crime by prosecuting corporations or do you, in some circumstances, need to prosecute individuals?” Mr Rosenstein said, before adding: “I think you do.”

In 2015, Sally Yates, his predecessor as the DoJ’s second-highest ranking official, ordered prosecutors “to identify culpable individuals at all levels in corporate cases”.

Her formal guidance, a response to criticism of the government’s failure to prosecute financial executives for their roles in the financial crisis, said that “criminal and civil corporate investigations should focus on individuals from the inception of the investigation”.

The government often struggles to prosecute corporate wrongdoers since it can be difficult to tie complex actions by sprawling global entities to the commands of an individual.

Former DoJ official John Malcolm, now at the Heritage Foundation, said the department might alter its policy on granting corporations credit for co-operating with investigations. The Yates memo promulgated an all-or-nothing approach that reduced sentences only if companies provided “all relevant facts about the individuals involved in corporate misconduct”.

“There’s any number of things they could do,” Mr Malcolm said. “But they could back away from that all-or-nothing approach.”

Any shift by the Trump administration would be the latest in a long line of pronouncements about white-collar crime by the department’s senior leadership. In 1999, Eric Holder, then deputy attorney-general, warned prosecutors to consider the “collateral consequences” of prosecuting corporate wrongdoers.

His memo, which also inaugurated a trend towards deferred prosecution agreements, was followed by similar missives by at least four of his successors. The directives are designed to provide federal prosecutors and the DoJ’s civil attorneys a road map for deciding whether to seek a corporate settlement or to target individual executives in court.

Though the statements attract significant public attention, they have more rhetorical weight than real world impact.

“This is not for the prosecutors who actually work these cases,” scoffed one former DoJ attorney.

The potential policy shift comes as corporate prosecutions continue to ebb. In July, the government filed 436 white-collar cases, down 11 per cent from one year ago and 35 per cent lower than in 2012, according to Syracuse University’s TRAC service.

Follow David J Lynch on Twitter: @davidjlynch

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