The Department of Justice will end the practice of multiple government agencies doling out duplicative punishments to companies for the same crime, Deputy Attorney General Rod Rosenstein said Wednesday.
When a business is convicted of a crime, they are subject to penalties imposed by the Justice Department. But multiple regulatory agencies can also sanction that company for the same conduct, a practice Mr. Rosenstein called “pilling on.” Those agencies include the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, Federal Reserve, Office of Foreign Asset Control and others.
“In highly regulated industries, a company may be accountable to multiple regulatory bodies,” Mr. Rosenstein said. “That creates a risk of repeated punishments that may exceed what is necessary to rectify the harm and deter future violations.”
Speaking at the New York City Bar White Collar Crime Institute, Mr. Rosenstein said the department is working to improve its coordination with these agencies to avoid repeat punishments. He said duplicative sanctions create bureaucratic red tape that sometimes punish those not responsible for the wrongdoing.
“‘Piling on’ can deprive a company of the benefits of certainty and finality ordinary available through a full and final settlement,” Mr. Rosenstein said. “We need to consider the impact on innocent employees, customers and investors who seek to resolve problems and move on. We need to think about whether devoting resources to additional enforcement against an old scheme is more valuable than fighting a new one.”
Under the new policy, the government will only use its investigation and prosecution powers when a company is suspected of a crime, ending the practice of using a the threat of criminal prosecution to encourage a larger settlement in civil cases, Mr. Rosenstein said.
The Justice Department will also encourage its attorneys to coordinate with federal, state, local and foreign enforcement authorities to resolve a case with a single set of penalties instead of each agency issuing a separate punishment for the same misconduct.
Mr. Rosenstein said in some cases multiple penalties may be necessary, but that each case will be evaluated to determine if the crime itself, statutory penalties and delay in finalizing a resolution could result in multiple punishments being issued.
“Focusing on deterrence requires us to think carefully about what we can achieve in our enforcement actions,” he said. “Corporate settlements do not necessarily directly deter individual wrongdoers.”