Deputy Attorney General Rod Rosenstein thinks some companies are overpaying for their crimes, and he wants that to stop.
Rosenstein, in a speech Wednesday in New York, said companies in highly regulated industries such as banking were too often assessed multiple fines by various agencies and governments for the same misconduct. While large fines are sometimes warranted, Rosenstein said, they shouldn't be the result of "piling on" by several enforcement authorities.
Such an approach "can deprive a company of the benefits of certainty and finality ordinarily available through a full and final settlement," Rosenstein told a roomful of white-collar lawyers and prosecutors attending a New York City Bar Association conference.
"We need to consider the impact on innocent employees, customers and investors who seek to resolve problems and move on," he said. "We need to think about whether devoting resources to additional enforcement against an old scheme is more valuable than fighting a new one."
Financial penalties
Rosenstein, whose oversight of the special counsel's investigation of possible ties between the Trump presidential campaign and Russia has drawn public rebukes from the president, announced a new policy that urges federal prosecutors to work more closely with their counterparts in other enforcement agencies when determining financial penalties. Under the policy, fines and forfeitures paid to other agencies may be considered when deciding Justice Department penalties.
In the speech, Rosenstein questioned whether large corporate fines actually prevent individuals at other firms from committing crimes.
"Corporate settlements do not necessarily directly deter individual wrongdoers," Rosenstein said. "They may do so indirectly, by incentivizing companies to develop and enforce internal compliance programs. But at the level of each individual decision-maker, the deterrent effect of a potential corporate penalty is muted and diffused."
Former federal prosecutors said much of what Rosenstein announced on Wednesday was already being practiced at the department. In recent years, companies that resolved investigations for violations of the Foreign Corrupt Practices Act, for example, received credit from the Justice Department and the Securities and Exchange Commission for penalties paid to other jurisdictions.
SocGen case
An upcoming $800 million resolution with Societe Generale for FCPA violations and rigging benchmark interest rates will include penalties paid to French authorities, a person familiar with the matter has said. Prior settlements with Telia Company AB and VimpelCom Ltd. included penalties paid to Dutch and Swedish authorities.
The new policy could come into play in cases where state regulators or attorneys general seek to bring their own actions on companies also under investigation by the Justice Department.
At the moment, there are at least two cases involving banks for conduct leading up the financial crisis — UBS and the Royal Bank of Scotland — where the institutions already entered into multimillion-dollar settlements with New York while awaiting Justice Department action. Under this policy, those penalties paid to New York could presumably be credited against any fine levied by the U.S.
