Annual Peter J. Henning Memorial Lecture

Earlier today, I had the honor of attending the second annual Peter J. Henning Memorial Lecture at Wayne State University Law School.  Mary Jo White, a partner at Debevoise & Plimpton and the former U.S. Attorney for the Southern District of New York and Chair of the U.S. Securities and Exchange Commission, delivered the lecture.  Her topic: "The Psychology of White Collar Crime and How to Combat It."

Mary Jo is an engaging speaker.  Her talk covered significant ground in a short period of time.  In addressing her chosen topic, she drew from academic and professional sources, including her own experience.

Her focus was on ways to create effective deterrence. She offered three things that work well in that regard: 

• prison sentences (althoigh not those with significantly long terms and no opportunity for parole) and wide publicity of the same in the news media, citing to 1980s insider trading enforcement efforts and the new millennium Enron era accounting fraud enforcement efforts as examples;
• multiple enforcement cases of the same kind brought close in time--creating what she referred to as "industry-changing deterrence"; and 
• whistleblower programs, which she praised for their capacity to permit broad and quick enforcement against serious frauds.

She also noted drawbacks associated with enforcing against firms rather than individuals.

Along the way, Mary Jo made numerous smaller points and subpoints, extolling the virtues of in-person compliance trainings, including empathic trainings offered by people who are in effectively the same position as the trainees.  She observed that deterrence is difficult in white collar crime enforcement; those who engage in while collar crime are psychologically complex and do not always respond logically in making law compliance/violation decisions.  She cited to Eugene Soltes's work Why They Do It) and to Cressey's fraud triangle and the subsequent Wolfe and Hermanson fraud diamond.  She noted technology's roles both as an efficient way to help identify fraud and as an assistance to fraudulent behavior.

In closing, Mary Jo suggested that achieving the effective deterrence of white collar crime will involve "thinking outside the box" about laws providing for and governing enforcement.  In particular, she suggested we should be looking at ways of increasing C-suite accountability.  She noted, however, the need for enforcement to be even and fair (devoid of, e.g., political motivations and overlays) in a C-suite accountability environment, which she admits may be easier said than done.

I am glad to be a part of this tradition honoring Peter Henning's life.  My post on last year's lecture can be found here.  Peter was a mentor and friend and will always be missed.  But this lecture series is one simple and consistent way to help keep his memory and work alive.