Some corporations have become so large or so systemically important that when they violate the law, the government cannot credibly threaten “efficient” criminal sanctions. By introducing political-economy constraints into a standard microeconomic model of corporate liability, this Note shows how this Too-Big-to-Jail (TBTJ) problem reduces prosecutors’ ability to deter corporate crime by simply fining a defendant corporation without the accompanying prosecution of culpable individuals and mandatory structural reforms. Prosecutors often lack the ability to charge culpable individuals or enforce structural reforms. This Note further illustrates how the risk of corporate criminal liability alone cannot incentivize a TBTJ firm to invest in internal controls or cooperate with government investigations. To deter criminality by TBTJ firms, prosecutorial strategy should credibly threaten culpable managers with monetary and nonmonetary penalties and not unduly rely on corporate defendants’ cooperation.
Prosecuting Corporate Crime When Firms Are Too Big to Jail: Investigation, Deterrence, and Judicial Review,
Available at: https://digitalcommons.law.yale.edu/ylj/vol128/iss5/4