The problem with Elizabeth Warren’s plan to jail more CEOs
Sen. Elizabeth Warren, a Massachusetts Democrat and presidential hopeful, introduced legislation this week that aims to make it easier to jail chief executives for corporate wrongdoing. By Renae Merle Renae Merle Reporter covering white-collar crime and Wall Street Email Bio Follow April 4 at 5:39 PM In recent months, Sen.
Warren’s legislation has little chance of Senate passage and was quickly criticized by business groups and white-collar defense attorneys as criminalizing normal corporate behavior. “Criminal penalties are the most drastic penalties a government can impose. We need to be very careful about how we use that,” said Tom Quaadman, executive vice president of the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce, a large lobbying group.
Warren’s proposal taps into lingering populist frustration with the lack of criminal prosecutions after the global financial crisis. Going after corporate executives has long been difficult, particularly at large companies, former prosecutors say. The investigations are lengthy and expensive, they say, and it can be difficult to prove that a CEO knew about specific corporate wrongdoing in a large organization.
Criminalizing negligence would upend precedent, legal experts say. In most cases, defendants must know they are committing a crime to be found guilty, said Peter Baldwin, a former federal prosecutor and a partner at Drinker Biddle. Being found negligent is a much lower standard and is traditionally pursued through civil courts, he said.
Under another bill, the Ending Too Big To Jail Act, Warren would create a corporate crime strike force using the Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP. The office, which was established to monitor the $700 billion taxpayer bailout effort following the financial crisis, has successfully prosecuted dozens of executives of small to midsize banks.
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