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The Yates Memo is Here to Stay: Signs of Increasing Efforts to Hold Individuals Criminally Liable for Corporate Wrongdoing
It is axiomatic that companies cannot do wrong without the actions of individuals. However, the trend over the past few decades, with a few exceptions, has been that individuals generally were not prosecuted for their roles in corporate wrongdoing that harmed the public welfare. In response, the Department of Justice (DOJ) announced policies designed to obtain information from companies about culpable insiders in order to facilitate prosecutions of those responsible for corporate malfeasance. Initially, it was questionable whether these efforts would pay off. Now, with what appears to be a recent escalation in prosecutions of corporate executives, it seems that the government is beginning to hit its stride.
These latest actions against corporate executives are significant for three reasons. First, several involve the government's reliance on never-before-used laws, at least not used in the criminal context against individuals, demonstrating the government's willingness to prosecute executives for their companies' crimes. Second, they show that the "Memorandum on Individual Accountability for Corporate Wrongdoing," issued in 2015 by then-Deputy Attorney General Sally Yates (the Yates Memo), and its progeny have been successful in spurring actions against individuals and companies, and will likely continue in force. Third, many involve felony prosecutions with potentially substantial penalties, including prison time. This is a far cry from the limited misdemeanor liability to which corporate executives traditionally have been exposed to under the Responsible Corporate Officer Doctrine (RCOD).
Even beyond this recent series of individual prosecutions, efforts are underway to expand the government's ability to criminally prosecute individuals over corporate wrongdoing. Senator Elizabeth Warren (D-MA) recently proposed a law that would hold executives of companies that surpass a certain annual revenue threshold criminally liable when their companies "commit crimes, harm large numbers of Americans through civil violations, or repeatedly violate federal law" — even if the executive had no actual knowledge of the wrongdoing. "Senator Warren Unveils Bill to Expand Criminal Liability to Negligent Executives of Giant Corporations" (Apr. 3, 2019). If enacted, this would constitute a significant expansion of the RCOD.
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