The Justice Department will begin rewarding companies who claw back pay from employees involved in white-collar crime in a bid to improve corporate culture that thrusts prosecutors onto new and legally ambiguous terrain.
Deputy Attorney General Lisa Monaco announced this month that prosecutors—in evaluating a company’s compliance program to determine potential charges for crimes such as securities fraud or bribing international officials—will begin assessing whether it financially penalizes employees “whose direct or supervisory actions or omissions contributed to criminal conduct.”
DOJ’s objective is to deter corporate crime by pushing clawback policies into the mainstream, after they’ve applied in far more limited circumstances in recent decades, said Monaco’s deputy, Marshall Miller, in a recent speech. Gaining traction will hinge on the willingness of companies to enforce a policy that could ease the chance of legal peril but expose them to potential employee suits, particularly from those who can’t be proven culpable or who work overseas.
“In practice it’s going to be a much more challenging task than it sounds like it would be in the memo, especially given the cross-jurisdictional nature of many of these criminal cases,” said Laura Perkins, a former DOJ fraud section supervisor who’s now the co-managing partner at...
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