Sen. Elizabeth Warren (D-MA), Wall Street's chief critic in Congress and crusader against corporate crime, on Wednesday, introduced legislation in the Republican-dominated Senate that will make it easier to criminally charge and jail CEOs and other company executives for their firm's wrongdoings.
Sen. Warren is running as the Democratic Party nominee for president of the United States. She's made economic justice and corporate oversight a centerpiece of her presidential campaign.
Her new bill, the "Corporate Executive Accountability Act," is part of her stubborn campaign to hold corporate leaders more accountable for their firm's alleged abuses. Sen. Warren also reintroduced the "Ending Too Big to Jail Act" that will hold big bank executives accountable when their banks break the law.
"Corporations don't make decisions, people do, but for far too long, CEOs of giant corporations that break the law have been able to walk away, while consumers who are harmed are left picking up the pieces," said Sen. Warren.
"These two bills would force executives to responsibly manage their companies, knowing that if they cheat their customers or crash the economy, they could go to jail."
She said executives that violate the Corporate Executive Accountability Act will be levied a fine and/or one year in jail for a first offense. Executives might face up three years in jail for subsequent convictions. She has long expressed her frustration big business executives often avoid jail time when they and their corporations are found guilty of wrongdoing.
"Too often, prosecutors don't even try to hold top executives criminally accountable," she wrote in The Washington Tuesday explaining her new bill.
"They claim it's too hard to prove that the people at the top knew about the corporate misconduct. This culture of complicity warps the incentives for corporate leaders. The message to executives? So long as you bury your head in the sand, you can keep collecting fat bonuses without risk of facing criminal liability.
"It's time to reform our laws to make sure that corporate executives face jail time for overseeing massive scams," she wrote.
Her bill "expands criminal liability to any corporate executive who negligently oversees a giant company causing severe harm to U.S. families."
That means a CEO or other executive don't necessarily need to be found guilty of fraud or any criminal misdeed to face jail time. It will be enough if they failed to actually know if bad behavior in their firms were taking place.
"We all agree that any executive who intentionally breaks criminal laws and leaves a trail of smoking guns should face jail time," she wrote. "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," wrote Warren.
Warren's bill will widen criminal liability to include "negligent executives" of corporations with more than $1 billion in annual revenue that has reached certain terms related to alleged wrongdoing. It will cover company executives:
Found guilty, plead guilty, or enter into a deferred or non-prosecution agreement for any crime.
Found liable or enter a settlement with any state or Federal regulator for the violation of any civil law if that violation affects the health, safety, finances, or personal data of 1% of the American population or 1% of the population of any state.
Found liable or guilty of a second civil or criminal violation for a different activity while operating under a civil or criminal judgment of any court, a deferred prosecution or non-prosecution agreement, or settlement with any state or Federal agency.
