November 8, 2017 / 7:20 PM / a year ago

U.S. Justice Dept. mulls limits on overlapping corporate penalties

WASHINGTON, Nov 8 (Reuters) - The U.S. Justice Department is exploring ways to scale back the size of corporate penalties involving companies facing punishments from multiple law enforcement agencies over the same underlying misconduct, a senior official said on Wednesday.

“Repeated punishment for the same conduct has the potential to undermine the spirit of fair play and the rule of law,” Deputy Attorney General Rod Rosenstein, the department’s No. 2 official, said in prepared remarks to a New York conference held by The Clearing House banking trade group.

“This is why the department is committed to making a concerted effort to apportion penalties among both international and domestic agencies, where appropriate,” Rosenstein added.

Big global banks in recent years have been forced to fork over billions of dollars to settle charges brought in the United States and sometimes abroad stemming from a variety of offenses. These ranged from shoddy practices involving mortgage foreclosures and disclosure violations over the sale of toxic subprime mortgages to the manipulation of key benchmarks such as Libor and violating sanctions.

In many cases, such monetary settlements have involved multiple U.S. law enforcement and regulatory agencies and foreign governments that pursued the banks over the same underlying misconduct.

Having multiple offices pursue a single company over the same issue can result in a “piling-on problem” that can be unfair to the business, its employees and its shareholders, Rosenstein said.

The Justice Department is considering proposals to “improve coordination in those situations and to help avoid duplicative and unwarranted payments,” Rosenstein said, though he did not elaborate on what those proposals could entail.

The department also is reviewing a memo penned by Rosenstein’s predecessor, Sally Yates, that urged federal prosecutors to emphasize holding individuals accountable for misconduct and to require companies to cooperate by providing information about possibly culpable employees.

Rosenstein said last week at an American Bar Association conference that he agreed with the premise of the Yates memo, and he had no updates yet on whether or not it the policy would be amended.

Reporting by Sarah N. Lynch; Editing by Will Dunham

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