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- Title
Nobody Goes to Jail: The Economics of Criminal Law, Securities Fraud, and the 2008 Recession.
- Authors
Brown, Tristan R.
- Abstract
The 2008 Recession was the largest financial downturn in the United States since the Great Depression. In its wake, Congress has passed new regulations, the Securities and Exchange Commission has entered into large consent judgments with allegedly responsible parties, and the Department of Justice has exacted record settlements from these companies and directors who allegedly played a role in causing this financial calamity. However, there has been a shocking absence of any criminal prosecutions. As this Note goes to publication, only one Wall Street executive, Kareem Serageldin, has been sentenced to prison for his part in the Recession. The argument from some is that prosecuting these companies and their management is not economically justified. The public interest, it is argued, is best advanced by keeping prosecution costs low and damage awards high. The benefits of incarcerating corporate management and directors are far exceeded by the social costs and fear that criminal prosecution of large financial firms could further imperil the economy. An economic analysis of criminal law presents a challenge to this reasoning. This economic analysis shows that criminal law operates by visiting upon the offender an equal or greater disutility than that which was visited upon the victim, which ineludes society. Incarceration and other non-pecuniary methods of punishment are reserved for situations where the offender cannot monetarily make the victims whole. Even under the most conservative appraisals of the scope of the Recession, the magnitude of damage caused and the inability of the alleged offenders to make the victims whole suggests that prosecution and incarceration of responsible parties is economically justified.
- Subjects
UNITED States; GREAT Recession, 2008-2013; IMPRISONMENT -- Law &; legislation; MORTGAGE-backed securities -- Law &; legislation; FINES (Penalties); IMPRISONMENT; UNITED States. Securities &; Exchange Commission
- Publication
New England Journal on Criminal & Civil Confinement, 2015, Vol 41, Issue 2, p343
- ISSN
0740-8994
- Publication type
Article