Signs of Increased Prosecution of Executives Illustrate the Yates Memo's Staying Power and Increased Risks for Corporate Owners and Insiders
When originally issued in September 2015, the “Yates Memo” was an effort by the U.S. DOJ and then-DAG Sally Yates to strengthen the Department’s commitment to holding executives and other responsible individuals at corporations criminally liable for their companies’ malfeasance. Although the Yates Memo’s future under the current Administration has been at times uncertain, a series of recent prosecutions of corporate insiders suggest that the principles the Yates Memo embodies are here to stay.
We recently examined this apparent trend of increased criminal enforcement activity against individuals for corporate wrongdoing in an article for the June 2019 issue of Business Crimes Bulletin (The Yates Memo Is Here to Stay: Signs of Increasing Efforts to Hold Individuals Criminally Liable for Corporate Wrongdoing). These prosecutions involve application of never-before-used laws that carry substantial penalties, including felony liability and incarceration, which is a significant departure from the limited misdemeanor liability to which corporate executives traditionally have been exposed to under the Responsible Corporate Officer Doctrine.
In addition to discussing three cases that are part of this trend, the article considers recent amendments to the Justice Manual regarding the availability of cooperation credit for companies that provide information about culpable individuals and a proposal by Senator Elizabeth Warren to radically expand criminal liability for executives of certain large corporations, modeled on the Federal Food, Drug, and Cosmetic Act’s (FDCA) enforcement provisions. Understanding these recent developments is essential for companies, their officers, and the lawyers who advise them.
Disclaimer: This post does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this post without first seeking the advice of counsel.