The Yates Memo: Corporate vs. Individual Criminal Liability | Holger Spamann | April 08, 2016

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The Yates Memo: Corporate vs. Individual Criminal Liability

In 2015, U.S. Deputy Attorney General Sally Yates sent an instantly famous memo on "Individual Accountability for Corporate Wrongdoing" to all U.S. Attorneys and Assistant Attorney Generals. The memo explained:

“One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing. Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public's confidence in our justice system.
“There are, however, many substantial challenges unique to pursuing individuals for corporate misdeeds. In large corporations, where responsibility can be diffuse and decisions are made at various levels, it can be difficult to determine if someone possessed the knowledge and criminal intent necessary to establish their guilt beyond a reasonable doubt. This is particularly true when determining the culpability of high-level executives, who may be insulated from the day-to-day activity in which the misconduct occurs. As a result, investigators often must reconstruct what happened based on a painstaking review of corporate documents, which can number in the millions, and which may be difficult to collect due to legal restrictions.
“These challenges make it all the more important that the Department fully leverage its resources to identify culpable individuals at all levels in corporate cases.”

Concretely, Yates ordered:

1. in order to qualify for any cooperation credit, corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct;
2. criminal and civil corporate investigations should focus on individuals from the inception of the investigation;
3. criminal and civil attorneys handling corporate investigations should be in routine communication with one another;
4. absent extraordinary circumstances or approved departmental policy, the Department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation;
5. Department attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases; and
6. civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit

Consider these questions:

• Is corporate liability useful or counterproductive if individuals are the ultimate targets?
• Could individual liability be good from the corporation’s (better: shareholders') point of view?
• Could there be too much individual liability from the corporation's (better: shareholders') perspective? How would you feel if you were a corporate employee, and what would you do?
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April 12, 2017

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