Prosecutors in the Boardroom: Using Criminal Law to Regulate Corporate Conduct

Conclusion

| 249 Conclusion Anthony S. Barkow and Rachel E. Barkow The preceding chapters have shown that the increasingly broad policymaking role of prosecutors in corporate affairs raises a host of complex issues. Indeed, the question of regulation by prosecutors is as complicated as the question of regulation itself. Whether a regulatory regime makes sense requires a careful assessment of its costs and benefits; the same holds true for the regulatory system created through DPAs, NPAs, and settlement agreements . Thus, just as regulatory reform in general must rest on reliable empirical information, so, too, must regulatory reform in the context of prosecutors ’ offices. Accordingly, before suggesting a comprehensive set of reforms for the practice of prosecutorial regulation, we would need more empirical data about the effectiveness of settlement agreements in reducing misconduct , the costs of their use, the availability of alternatives, and the costs and benefits of particular terms within agreements. This empirical inquiry should be the primary aim of further research.1 But although some reform avenues will require further study, the previous chapters demonstrate that we actually do know quite a bit about these agreements already, as a matter of both theory and practice. And on the basis of this knowledge, the contributing authors have suggested several reforms. Some of these reforms would require fundamental shifts in the way we currently approach not just DPAs, NPAs, and settlement agreements but corporate regulation in general. On many of these issues, our commentators are not in agreement. For instance, Richard Epstein would “junk corporate criminal liability” because in his view it leads to overdeterrence. MarianoFlorentino Cuéllar, in contrast, makes the case for criminal law enforcement as a key part of the regulatory enterprise of risk regulation. He notes, among other things, that the use of criminal prosecutions can shape public perceptions in a way that allows for more civil regulation. Samuel Buell would similarly retain corporate criminal liability, though he advocates for less criminal enforcement and more activity by the SEC in addressing corporate misconduct . He would have the SEC insist on DPA-like remedial terms when it set- 250 | Anthony S. Barkow and Rachel E. Barkow tles with companies and abandon its practice of allowing firms to “neither admit nor deny” the charges against them. To accomplish that latter goal, he suggests giving the SEC the power to veto securities fraud class actions so that an admission of wrongdoing would not subject companies to a flood of collateral civil suits, barring the collateral use of SEC settlements, or perhaps ultimately even doing away with the private right of action under Rule 10b-5. Thus, Buell’s proposal, as he admits, would require fundamental rethinking of private actions for securities fraud. Jennifer Arlen similarly would place greater responsibilities with regulatory agencies, giving them the authority over compliance programs. Lisa Kern Griffin, Cindy Alexander, and Mark Cohen argue for greater resources to prosecutors. Griffin wants more funding so that prosecutors and investigators are less reliant on private cooperators to detect crime. Alexander and Cohen argue that the greater the likelihood of detection, the greater the deterrence, thus law enforcement budgets should increase. These proposals address the issues raised by regulation by prosecutors, but they touch on much broader topics of corporate regulation, securities regulation, and law enforcement resources. Thus, they should be considered as part of a much broader study of these issues. Scholars should thus take cues from the contributing authors and consider the ways in which these reforms could improve not just the use of settlement agreements in criminal law but corporate regulation more generally. Not every path to reform requires further study. The analyses of the contributing authors also point to some improvements that could be made right now. 1. Establishing Guidelines and Improving the Internal Review Process for When the Use of a DPA, NPA, or Settlement Agreement is Appropriate. The preceding chapters make clear that that there is room for improving the internal process within prosecutors’ offices before prosecutors set out to establish regulations that will govern a company. As an initial matter, prosecutors should establish internal guidance describing what steps prosecutors should take before imposing regulations on companies. The first step should involve consultation with someone not involved in the case before going forward with any DPA, NPA, or settlement agreement . The prosecutor or team of prosecutors investigating a company should not decide unilaterally whether or not to launch an indictment or accept a DPA, NPA, or settlement agreement in its place. In addition to the...