Americans’ perception that bankers and Wall Street fat cats escaped accountability for their role in the recent financial crisis has not gone unnoticed by the Department of Justice (DOJ). The difficulties in prosecuting these executives has left the Department of Justice defending its record.
In an attempt to address the issue of individual accountability for their conduct inside a corporation, DOJ Deputy Attorney General Sally Quillian Yates issued a Memorandum dated September 9, 2015 to all DOJ attorneys titled “Individual Accountability for Corporate Wrongdoing.” This six-pronged memo that has subsequently been codified in the United States Attorneys’ Manual is a shot across the bow to counsels representing corporations. A primary tenet states, “. . . in order to qualify for any cooperation credit, corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct.” The thrust of the memo is for federal prosecutors to focus on individual conduct throughout their investigations.
Will this policy change behavior? Will corporate counsels advise boards to start throwing executives under the proverbial bus? Will the threat of tire-tread marks across a pin-stripe suit cause executives to stop enriching themselves at the expense of the American public?
This policy has actually had two unintended reactions by the audience it intended to captivate.
- Federal prosecutors are actually a little offended that one of their prosecutors in chief has dispatched a missive outlining the obvious. Prosecutors have always felt their primary target is the individual and indicting a corporation should be considered when individualized evidence of guilt could not be obtained.
- Yates’ predecessor and now a member of the defense bar, former Deputy Attorney General James Cole, criticized the policy as “name and shame.” Cole cautions that corporations are on the verge of being required to turn over attorney-client privilege material and even open the corporation to more civil and criminal liability. He argues the policy will have unintended consequences. Executives will not want to talk to their corporate attorneys. Or, it will prompt corporate legal teams to form joint defense agreements with each individual executive’s counsel. The net result being less, not more cooperation.
Behavior modification is the goal. Let’s see how DOJ’s policy unfolds.
Read more about behavior modification at BringingFreudtoFraud.com.