Thursday, August 18, 2011
Jennifer Arlen (New York University School of Law) has posted The Failure of the Organizational Sentencing Guidelines on SSRN. Here is the abstract:
To deter corporate crime, corporate sanctions must be structured to induce larger firms to help deter crime by their managers and other employees. In particular, firms must be induced to detect and report wrongdoing, and to cooperate with the government’s effort to identify and sanction the individuals responsible for the crime. Federal authorities can achieve this goal if, but only if, corporate criminal and civil sanctions are structured to ensure that firms face lower expected sanctions if they detect, report, and cooperate than if they do not. In the U.S., corporate criminal sanctions for most firms convicted of federal crimes are determined by the Organizational Sentencing Guidelines, which were intended to encourage firms to adopt effective compliance programs, self-report and cooperate through the promise of a reduced fine for firms engaging in this desired conduct, in some circumstances. This Article evaluates whether the mitigation provisions of the Organizational Sentencing Guidelines are effective at achieving this goal. It shows that they are not because the Guidelines provide too little mitigation. Moreover, and perversely, the Guidelines are particularly ineffective when corporate detection and investigation is most important: in cases involving crimes committed by managers of large firms. The Sentencing Commission should reform the Guidelines to better encourage corporate monitoring, reporting and cooperation.