Debate surrounding white collar crime – focused on probes, policies, sentencing and just about everything else – is front-of-the-menu stuff these days. In fact, we recently addressed the topic in a Hilder & Associates blog post. We noted in our May 9 entry the oft-pushed view “that favors more white collar prosecutions and convictions, especially for corporate principals.”
A special spotlight falls these days on newly proposed federal legislation termed the Corporate Executive Accountability Act (CEAA). That would-be law is endorsed most notably by U.S. Sen and presidential candidate Elizabeth Warren (D-Mass), who frequently rails against executive malfeasance in the corporate realm.
If enacted, the CEAA would provide for a major shake-up in American law addressing white collar criminal culpability. We stress in our above-cited blog post that it “would greatly modify the threshold standard currently required to impose liability on upper-end decision makers like company CEOS, presidents and directors.”
What the CEAA would centrally do is replace a time-honored duty of prosecutors. Government lawyers must prove beyond a reasonable doubt that a company executive is guilty of corporate wrongdoing before any criminal sentencing can be imposed.
The new statute lowers the culpability bar to a mere negligence threshold. A recent national news report on the CEAA stresses that it sanctions punishment “if the executive were merely negligent in overseeing the enterprise.”
That lowered bar spells a material departure from solidly established notions of guilt-linked requirements and, to many people, fundamental justice. High-ranking company officials might conceivably be targeted under the CEAA for actions not remotely linked to personal bad faith or criminal intent. Too low a bar could chill corporate action and growth.
In fact, states the New York Times, it could “end up reducing compliance with the law,” owing to executives’ increased worries that legal authorities are constantly looking over their shoulder. Corporate principals more concerned with personal criminal exposure than with regulatory fiats might feel pressured to cover up conduct that could be remotely construed as a legal violation.
We will keep an eye on the CEAA’s forward legislative movement and keep readers well apprised of any material developments occurring with the prospective law.