September 17, 2006
Corporate Criminal Liability
John Hasnas has an editorial in the Wall Street Journal ("Do Nothing") summarizing his position on corporation criminal liability. His view is that absolute corporate liability for a misbehaving senior officer or director should be rejected in favor of a standard of corporate criminal liability based on institutional culpability (was there a corporate policy that facilitated the criminal misconduct?). Corporate criminal liability is in the spotlight because it has proven so devastating to financial companies, whose reputation for honesty is critical to their business. Criminal liability of an accounting firm or a bank or a brokerage operation can cause investors and customers to run and kill the business. Hasans is correct no the merits; I would favor a defense, however, based on a blame free corporate culture and explicit instructions and training to behave rather than a redefining of the offense. I would also have no defense if the senior officers in charge of the company are the wrongdoers; they are the company.
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