U.S. Justice Department to crack down on repeat corporate offenders

By Luc Cohen

NEW YORK (Reuters) -The U.S. Justice Department said on Thursday it will make it harder for companies to enter into multiple settlements that defer or waive prosecutions, part of a shift toward tougher enforcement of white-collar crime.

    At an event at New York University, Deputy Attorney General Lisa Monaco will also announce planned steps to take to make it more attractive for companies to pay penalties by clawing back executive compensation rather than burdening shareholders, the department said.

Companies that voluntarily report misconduct and cooperate with investigators will not be required to plead guilty in most cases, Monaco will announce, an effort to encourage companies to invest in compliance. The department will also require companies that choose to cooperate with prosecutors to do so more quickly.

Democratic President Joe Biden’s Justice Department has toughened its stance toward corporate offenders. White-collar prosecutions fell to an all-time low under former President Donald Trump’s Republican administration.

In October, the Justice Department issued new rules requiring companies to name all people involved in misconduct in order to receive credit for cooperation, and required prosecutors to consider a company’s full record when deciding how to resolve a probe.

Since Biden took office, federal prosecutors have brought racketeering charges against the founder of Archegos Capital Management over the $36 billion firm’s meltdown, and have secured a guilty plea from a unit of Allianz SE for fraud over the collapse of some investment funds.

Under the new policy on settlements, the deputy attorney general’s office must approve any company’s second non-prosecution or deferred prosecution agreement, the department said. Those deals let companies escape criminal prosecution in exchange for fines and promises of better behavior.

Between 10% and 20% of all significant corporate criminal resolutions involve repeat offenders, Monaco said in October, raising doubts about the deterrent effect of such agreements.

(Reporting by Luc Cohen in New York; Editing by Aurora Ellis and David Gregorio)

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