On April 3, 2019, Sen. Elizabeth Warren introduced a new bill entitled the Corporate Executive Accountability Act that would allow negligent executive officers to be prosecuted for a corporation’s wrongdoings. According to the proposed bill, an executive officer of any corporation with more than $1 billion annual revenue, who negligently permits or fails to prevent a violation of law could face penalties of fines, imprisonment or both. Under the proposed bill, executives of companies could be punished with jail time of up to a year for the first offense, and up to three years for any additional offenses. The violations of law discussed in the proposed bill include:
- any criminal violation of federal or state law, for which the corporation was convicted or entered into a deferred or non-prosecution agreement;
- any civil violation of federal or state law, for which the corporation is found liable or entered into a settlement agreement, which affects the health, safety, finances or personal data of more than 1% of the population of the U.S. or of a state; and
- any criminal or civil violation of federal or state law that was committed while the corporation was operating under a civil or criminal judgment, settlement, a deferred prosecution or non-prosecution agreement.
The proposed bill would lower the threshold of proof by requiring only a negligent state of mind. If it can be proven that an executive acted unreasonably in preventing violations of law, the executive can be held criminally liable for the wrongdoings even if it is not proven that the executive had actual knowledge of the violations.
The full text of the bill is available here.
Sen. Warren also reintroduced a bill called “Ending Too Big to Jail Act,” which aims to make it easier to hold executives of financial institutions accountable by creating a special inspector within the Treasury Department to prosecute fraud committed by financial institutions, and requiring executives of financial institutions with assets greater than $10 billion to report annually that they have found no criminal conduct or civil fraud in the financial institution.