The Tide of Change Laps at Wall Street

Later today at New York University’s Law School, Obama’s new Deputy Attorney General, Sally Q Yates, will unveil a memo setting out a new policy for US federal prosecutors investigating corporate crime.   Its contents will chill many corporate executives to their boots.  The memo prioritises the pursuit of individual employees – not just their companies.  The plan is that prosecutors should no longer settle for substantial payments from the company alone.

Yates is a tough cookie.  A career prosecutor, she spent 1994 to 2002 as Chief of the Fraud and Public Corruption Section of the US Attorney’s office, supervising all of the office’s white collar cases.  Since her May 2015 appointment to the Deputy post she has sunk her teeth into the problem of corporate crime resulting in the new memo which was  trailed yesterday by the US Attorney General, Loretta Lynch.  Its contents are potentially a game changer.

Companies under suspicion of criminality which commission their own internal investigations will now be expected to name names. Considerable pressure will be brought to bear on corporations to hand over evidence against senior staff.

UK bankers and corporate executives should think on the scope of US jurisdiction.  Not only can they face extradition to the US but there is a new adversarial spirit across the Atlantic.  This could have transformed the US Attorney’s investigation of the French bank, BNP Paribas, which ended last year in a record $8.9billion in penalties for breaching US sanctions.  There the bank reportedly withheld records concerning individual executives until limitation periods had expired.

There is a reason for all this.  The public appetite for vengeance on those thought responsible for the 2008 crash, austerity and the growing income gap is impacting on the political class.  The astonishingly successful campaigns run by Jeremy Corbyn and Bernie Sanders expose the unstable footings of the existing order.

Even Hilary Clinton promised in July to “prosecute individuals as well as firms when they commit fraud”, so if the US polls are correct the new policy is likely to survive the length of time required to investigate and bring a tranche of corporate executives before the courts.

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