New Justice Dept. policy aims to get tough on Wall Street fraud

WASHINGTON  — The Justice Department issued a new policy Wednesday that made the prosecution of Wall Street executives involved in financial fraud a major priority, all but acknowledging nagging criticism that powerful corporate figures have escaped criminal charges in favor of giant monetary penalties.

“Effective immediately, we have revised our policy guidance to require that if a company wants any credit for cooperation, any credit at all, it must identify all individuals involved in the wrongdoing, regardless of their position, status or seniority in the company, and provide all relevant facts about their misconduct,’’ according to Deputy Attorney General Sally Yates’ prepared remarks for a Thursday speech at New York University Law School.

“It’s all or nothing. No more picking and choosing what gets disclosed. No more partial credit for cooperation that doesn’t include information about individuals,’’ Yates said.

The New York Times first reported the policy change Wednesday night.

Yates’ prepared remarks elaborate on policy issued to federal prosecutors nationwide Wednesday, calling for federal authorities not to provide individuals “protection from criminal or civil liability,’’ absent extraordinary circumstances.

“The rules have just changed,’’ Yates said. “Effective today, if a company wants any consideration for its voluntary disclosure or cooperation, it must give up the individuals, no matter where they sit within the company.’’

In the aftermath of the financial crisis and housing market collapse, Justice has long been criticized for failing to target executives who presided over the rampant fraud that facilitated the crises.

“Corporate matters cannot be resolved without clear plan to resolve cases against individuals and all decisions declining to prosecute potential culpable individuals must be approved by the U.S. attorney of the head of the division handling the case,’’ according to the new Justice guidelines.

“Civil attorneys will consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.’’

Some of the changes, according to the memo distributed to all 93 U.S. attorneys’ offices across the country, “represent a departure from the department’s long-standing approach to corporate prosecutions.’’

“The policy will apply to all future investigations of corporate wrongdoing,’’ the memo states.

Yates, in remarks to the NYU law school, said the “mission here is not to recover the largest amount of money from the greatest number of corporations.

“Our job is to seek accountability from those who break our laws and victimize our citizens.  It’s the only way to truly deter corporate wrongdoing.’’

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