Corporate Crime and Punishment: The Crisis of Underenforcement
“Professor Coffee's compelling new approach to holdingfraudsters to account is indispensable reading for any lawmakerserious about deterring corporate crime.”—Robert Jackson, former Commissioner, Securities and ExchangeCommissionIn the early 2000s, federal enforcement efforts sent whitecollar criminals at Enron and WorldCom to prison. But since the2008 financial collapse, this famously hasn't happened.Corporations have been permitted to enter into deferred prosecutionagreements and avoid criminal convictions, in part due to amistaken assumption that leniency would encourage cooperation andbecause enforcement agencies don't have the funding or staff topursue lengthy prosecutions, says distinguished Columbia LawProfessor John C. Coffee. “We are moving from a system of justicefor organizational crime that mixed carrots and sticks to one thatis all carrots and no sticks,” he says.He offers a series of bold proposals for ensuring that corporatemalfeasance can once again be punished. For example, he describesincentives that could be offered to both corporate executives toturn in their corporations and to corporations to turn in theirexecutives, allowing prosecutors to play them off against eachother. Whistleblowers should be offered cash bounties to comeforward because, Coffee writes, “it is easier and cheaper to buyinformation than seek to discover it in adversarial proceedings.”All federal enforcement agencies should be able to hire outsidecounsel on a contingency fee basis, which would cost the publicnothing and provide access to discovery and litigation expertisethe agencies don't have. Through these and other equallycontroversial ideas, Coffee intends to rebalance the scales ofjustice.