SEC Increases Use of Deferred Prosecutions Agreements Against Corporations

Corporate Counsel Magazine online is running a Legal Times article describing the change in strategy of federal regulators. The author, Vanessa Blum (LT's Federal Government & Practice Reporter) suggests that the SEC has moved away from pursing criminal charges against corporations (relatively rare in any case) and is now focusing on indicting and prosecuting executives who have been implicated in financial fraud.

Justice Deferred - The feds' new weapon of choice makes companies turn snitch to save themselves

Vanessa Blum
Legal Times
03-23-2005

The Department of Justice last week scored a major victory with the conviction of ex-WorldCom chief Bernard Ebbers for lying to investors and government regulators in an effort to cover up his company's laggard financial performance.

But even as government lawyers prepare for more high-profile trials against individual business executives, they are taking a very different tack against companies accused of cooking the books.

Increasingly, aggressive federal prosecutors are willing to put criminal charges they have filed against corporations on hold in exchange for cooperation in their investigations against allegedly crooked employees.

In the past six months alone, the Justice Department has announced such arrangements -- known as deferred prosecution agreements -- with six companies, including the Monsanto Co., Time Warner Inc., American International Group Inc. and Computer Associates International Inc.

The article continues with a review recent cases as well as a discussion of the expected benefits and potential pitfalls of this approach. Obviously the big losers in the new scenario will be "rogue" company execs who will much more apt to face charges.

To read the rest, click on over here.

-- MDT