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DOJ to curtail use of duplicative penalties for corporate crimes

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DOJ to curtail use of duplicative penalties for corporate crimes

(Reuters) — The U.S. Justice Department unveiled a new corporate crime policy that will aim to curtail the "piling on" of multiple penalties onto companies from different government authorities to punish the same underlying wrongdoing, Deputy Attorney General Rod Rosenstein said Wednesday.

"In football, the term 'piling on' refers to a player jumping on a pile of other players after the opponent is already tackled," he said during a speech to the New York City Bar White Collar Crime Institute.

"It is important for us to be aggressive in pursuing wrongdoers. But we should discourage disproportionate enforcement of laws by multiple authorities."

The announcement by the No. 2 official at the Justice Department is not a surprise.

In November, Deputy Attorney General Rosenstein previewed the policy change, saying the Justice Department was exploring ways to prevent multiple law enforcement agencies from slapping companies with corporate penalties over the same underlying misconduct.

Big global banks in recent years have forked over billions of dollars to settle charges brought in the United States and sometimes abroad stemming from a variety of offenses, from shoddy practices involving mortgage foreclosures and disclosure violations over the sale of toxic subprime mortgages to the manipulation of key benchmarks.

In many cases, monetary settlements have involved multiple U.S. law enforcement and regulatory agencies and foreign governments.

Deputy Attorney General Rosenstein said on Wednesday that in some industries companies may have to answer to multiple regulators, which "creates a risk of repeated punishments that may exceed what is necessary to rectify the harm and deter future violations."

He said there is a need to consider the impact on innocent employees, customers and investors who seek to resolve problems and move on.

He added that the new policy will emphasize that the Justice Department "should not employ the threat of criminal prosecution solely to persuade a company to pay a larger settlement in a civil case."

Meanwhile, he said, authorities will look at a variety of factors in assessing penalties on corporate wrongdoers, including the egregiousness of the misdeed, statutory mandates, the risk of delay in resolving a case and "the adequacy and timeliness of a company’s disclosures and cooperation with the department."

The policy shift comes at a time when the Justice Department has been seen as focusing less on white collar crime, and directing more resources toward prosecuting violent crimes and drug and immigration offenses.

Under the Trump administration, the department also made permanent a pilot program started under the Obama administration that gives companies more lenient treatment if they willingly disclose possible violations of anti-bribery laws to the Justice Department at an early stage.

 

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