Saturday, January 25, 2014
Federal prosecutors have explained the absence of any signature prosecutions of financial executives in the wake of the financial crisis to the high level of intent required by criminal laws typically used to prosecute economic crimes. If the barrier to holding individual executives is the lack of evidence of specific intent, the one possibility is to adopt a new crime based on recklessness for executive decisions that result in significant harm. In this essay, I look at how statutes in Germany and the United Kingdom shed light on how a provision can be crafted to hold senior managers responsible for reckless corporate decisions. But the question remains whether such a new law is needed in the wake of the financial crisis, and whether it would deter the type of risk taking expected in a business enterprise seeking a high return on capital.