Corporate Prosecutions at 10-Year Low

Securities Law Daily provides daily coverage of developments in the regulation of federal, state, and international securities and futures trading, with objective coverage of the...

By Llewellyn Hinkes-Jones

Nov. 9 — Criminal prosecutions of corporations by the Justice Department dropped 29 percent over the last decade, according to a new report from the Transactional Records Access Clearinghouse (TRAC).

Corporate prosecutions dropped from a high of 398 in 2005 to a 10-year low of 237 in 2014, the report said.

While prosecutions have dropped, the DOJ has become more successful in the cases they do take on. Also, the agency has turned to other means of enforcement.

Based on numbers compiled by Bloomberg BNA from TRAC's data, the rate of convictions compared to the number of prosecutions that went to trial each year jumped from 38 percent to 68 percent over the past decade, reaching a 10-year high in 2014. The DOJ is also recovering more in fines each year, with over $3 billion levied in 2014—over four times the amount in 2008.

In place of prosecutions, there has been a rise in deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs), which allow defendants to avoid jail time, a trial and even a no-contest plea.

“If they are bringing more cases—but stronger ones—or settling cases more readily and more favorably, that does speak in favor of the current approach,” said University of Virginia Law Professor Brandon L. Garrett.

Concerns About Transparency

Garrett warned, however, that DPAs and NPAs come with serious concerns regarding transparency. Even though DPAs and NPAs account for only a few cases every year, they represent the bulk of cases involving large, public companies. While DPAs involve an initial filing, for NPAs nothing is ever filed in court and there is little in the way of a paper trail. As a result, “the most important and significant cases are increasingly settled out of court.”

The TRAC numbers come amid criticism that the DOJ is too lenient on Wall Street crime. According to a separate TRAC report, white collar criminal prosecutions of individuals are at a 20-year low.

In September, the DOJ issued a memo emphasizing accountability for individuals in corporate crimes—not just the corporations themselves—even though “responsibility can be diffuse […] and it can be difficult to determine if someone possessed the knowledge and criminal intent” to prove an individual's guilt.

In the wake of that memo, however, the U.S. Attorney's Office for the Southern District of New York dropped charges in the high-profile, insider-trading case against seven employees of SAC Capital Advisors LP, six of whom had already pleaded guilty and cooperated with the prosecution.

According to the Joon Kim, chief counsel in the Manhattan federal prosecutors' office, the dismissals were largely a result of the U.S. Court of Appeals for the Second Circuit's Newman decision late last year, which set a higher standard for insider-trading charges and makes it “more difficult to prosecute sophisticated tipping chains in the investment industry.”

(Click images below to enlarge.)




To contact the reporter on this story: Llewellyn Hinkes-Jones in Washington at

To contact the editor responsible for this story: Heather Rothman at

Read the TRAC report here: