Elizabeth Warren has introduced the Corporate Executive Accountability Act and is pushing it in a Washington Post Op-Ed:
I’m proposing a law that expands criminal liability to any corporate executive who negligently oversees a giant company causing severe harm to U.S. families. We all agree that any executive who intentionally breaks criminal laws and leaves a trail of smoking guns should face jail time. But right now, they can escape the threat of prosecution so long as no one can prove exactly what they knew, even if they were willfully negligent.
If top executives knew they would be hauled out in handcuffs for failing to reasonably oversee the companies they run, they would have a real incentive to better monitor their operations and snuff out any wrongdoing before it got out of hand.Elizabeth Warren: Corporate executives must face jail time for overseeing massive scams
The bill itself is pretty short. Here’s a summary:
- Focuses on executives in big business. Applies to any executive officer of a corporation with more than $1B in annual revenue. Definition of executive officer is same as under traditional federal regulations, plus anyone who “has the responsibility and authority to take necessary measures to prevent or remedy violations.”
- Makes execs criminally liable for a lot of things. Makes it criminal for any executive officer “to negligently permit or fail to prevent” any crime under Federal or State law, or any civil violation that “affects the health, safety, finances, or personal data” of at least 1% of the population of any state or the US.
- Penalty. Convicted executives go to prison for up to a year, or up to three years on subsequent offenses.
This is pretty breathtaking in its sweep of criminal liability. It criminalizes negligence. And it applies that negligence standard to any civil violation that “affects” the health, safety, finances, or personal data of at least 1% of a state.
Under this standard every single executive at Equifax, Facebook, Yahoo, Target, etc. risks jail for up to a year. Just read this list. Will be interesting to see where this goes.