abstract. 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.

The Note also advances a structural explanation for the dearth of individual prosecutions relative to negotiated criminal settlements with TBTJ companies: prosecutors currently rely on an apparatus for investigation that may produce information necessary for corporate settlements but will not reliably produce evidence necessary to charge culpable individuals. In response, this Note proposes enlisting the courts as a bulwark against these structural incentives for prosecutors to agree to large corporate settlements without insisting on comprehensive investigation of underlying individual culpability. Thus, I propose a legislative reform that would authorize judicial review of deferred prosecution agreements to ensure prosecutors have collected sufficient evidence prior to finalizing corporate settlements.

author. Yale Law School, J.D. 2018; London School of Economics and Political Science, M.Sc. Risk and Finance 2015; University College London, M.Sc. Economic Policy 2014. I would like to thank Kate Stith, Judge Jed S. Rakoff, Jennifer Taub, Jennifer Arlen, Brandon Garrett, Jesse Eisinger, Amy Kapczynski, Cloda Jenkins, and Kate Redburn for their ideas, criticism, and assistance. I would also like to thank Giovanni Sanchez, Matt Nguyen, and the Yale Law Journal staff for invaluable editing. All errors and omissions are my own. The opinions expressed in this Note are those of the author alone and do not necessarily reflect the views of his employer or clients.