How to Punish Corporate Fraudsters
EDWARD THURLOW, an English lord chancellor in the 18th century, reputedly said that it’s difficult to punish a corporation because there is “no soul to be damned, and no body to be kicked.”
But there is, in fact, a way to punish corporations for their misdeeds: Bar their officers from government work. So why don’t we?
.. But instead of using these tools, most federal prosecutors focus solely on bringing criminal charges against corporate executives. And if those are unavailable, they look no further. Sally Q. Yates, the deputy attorney general, recently announced that the Justice Department would try to squeeze the names of bad actors out of corporate defendants as a condition of any settlement negotiation. But Justice Department lawyers concede that in many cases it’s practically impossible to secure criminal convictions.
This single-minded focus on criminal convictions is misguided — too often, corporate fraud goes unpunished. JPMorgan Chase paid $13 billion in 2013 for its role in the mortgage crisis. But what happened to its executives that year? None were adequately punished, the stock price rose 28 percent and its C.E.O., Jamie Dimon, got a 74 percent raise.