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Guilt edged

America’s regulators are increasingly assertive

By W.Z, K.N.C. and P.K.

America’s regulators are increasingly assertive

IN THE past firms feared their rivals. Now they need to beware of regulators too. American companies have been struck by a wave of fines and penalties, from criminal and civil cases. Payments made for criminal cases alone have increased from $1 billion a year in the early 2000s to five times as much these days. So far this year, they’ve surpassed $12 billion. Some of the biggest, most regular pay-outs have come from pharma companies and banks.

Regulators are keen to strike deals rather than trundling off to court. These arrangements are known as deferred and non-prosecution agreements, and are convenient for bureaucrats—they get to trumpet “record” fines without waiting for a judge or jury to decide. The problem is that this approach doesn’t produce a trail of evidence or clear rules, and too few individuals go to prison to significantly improve corporate behaviour.

Together the data, from Brandon Garrett at the University of Virginia, suggest firms might want to watch their competitors closely, but their regulators even more. Our briefing on the changing face of the American corporate legal system is here.

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