In a speech given last Tuesday, U.S. President Barack Obama, called for improved oversight and accountability for financial firms, suggesting that harsher punishments should be imposed for criminal acts. Obama's proposal quickly followed that of chairwoman of the Securities and Exchange Commission, Mary L. Schapiro, to raise the level of available civil penalties for violations of securities laws.
In his speech, Obama stated:
"Too often, we've seen Wall Street firms violating major anti-fraud laws because the penalties are too weak and there's no price for being a repeat offender. No more. I'll be calling for legislation that makes those penalties count so that firms don't see punishment for breaking the law as just the price of doing business."
Many financial firms have already been fined substantial amounts, such as the $550 million fine Goldman Sachs received for selling a mortgage-bond related security. It has been posited, however, that more severe sanctions could put companies out of business, and appear unfeasible in the current economic climate.
In response to Obama's proposal, however, several critics, such as writer Peter J. Henning, have voiced concerns as to the efficacy of the plan. In his article, "The Limits of Bigger Penalties in Fighting Financial Crime" Henning contends, before the punishment for financial crimes can be imposed, the government is required to prove an intentional violation, which in a criminal case requires proof beyond a reasonable doubt. However, because it is often difficult to prove that the parties involved in the alleged crimes had an intent to defraud, particularly when senior corporate officers claim that they were not directly involved in any wrongdoing by underlings and therefore did not have the requisite criminal intent, many offenses often go unprosecuted.
Second, Henning claims, because Congress has already pushed for higher sentences through Section 1079A of the Dodd-Frank Act, directing the U.S. Sentencing Commission to revise sentencing guidelines for financial crimes to ensure they reflect the impact of the offenses, there is already pressure to increase the recommended punishment for corporate fraud.
Finally, Henning maintain that, because not all federal judges are willing to impose significant prison terms on white-collar offenders, and the sentencing guidelines are not mandatory, the recommended increased sentences may not result in any greater punishments.
Regardess of the impact of Obama's proposal, the attorneys of DiCaudo, Pitchford & Yoder have extensive experience handling federal criminal charges, including white collar financial crimes such as those Obama has addressed. If you are facing federal criminal charges or have questions regarding federal criminal law, a knowledgeable Criminal Attorney can provide you with the answers you need. For legal advice or information, contact the experienced Criminal Attorneys of DiCaudo, Pitchford & Yoder today.