Sept 11, 2015 (LBO) – The U.S. Department of Justice says it would be better off focusing on individuals that commit corporate crimes rather than focus on companies, in new guidelines issued this week.
This is a tacit acknowledgment of failure to prosecute individuals following the 2008 financial crisis, the Wall Street Journal reported.
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New rules have been issued in a memo to federal prosecutors by the Attorney General Loretta E. Lynch.
“One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing,” the memo reads.
This “deters future illegal activity, it incentivizes change in future corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.”
In 2013, JPMorgan Chase agreed to pay 13 billion dollars to settle civil fraud charges relating to the sale of mortgage securities leading into the financial crisis, Bloomberg reported.
Even though the fine was half of the bank’s profit for the prior year, the burden of paying it fell mainly to the bank’s shareholders.
“The memo amounts to a striking admission that the DOJ’s policy on Wall Street corporate crime has been completely ineffective,” said Robert Weissman, president of watchdog group Public Citizen. “The real test going forward will be if the agency can put this policy into action and enforce it aggressively.”