Why Do Corporate Fraud Cases Spare Individuals?

That’s what Senator Jack Reed, Democrat of Rhode Island and chairman of a subcommittee that oversees securities regulations recently asked in a New York Times article:

“Pharmaceutical companies, military contractors, banks and other corporations are on track to pay as much as $8 billion this year to resolve charges of defrauding the government, analysts say — a record sum and more than twice the amount assessed last year by the Justice Department.

“The surge in penalties is because of a number of factors, including the resolution of longstanding actions against drug makers and military contractors, as well as lawsuits brought against mortgage lenders after the financial crisis. But it also reflects a renewed emphasis on corporate fraud, as the Justice Department devotes more resources to the issue and demands higher penalties from companies….

…“A lot of people on the street, they’re wondering how a company can commit serious violations of securities laws and yet no individuals seem to be involved and no individual responsibility was assessed,” Senator Reed said at a recent hearing.

Click to read the full NY Times article.

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