Corporate Compliance
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Corporate Compliance

New Approaches to Regulatory Enforcement

Sharon Oded

This book considers how a regulatory enforcement policy should be designed to efficiently induce proactive corporate compliance. It first explores two major schools of thought regarding law enforcement, both the deterrence and cooperative approaches, and shows that neither of these represents an optimal regulatory enforcement paradigm from a social welfare perspective. It provides a critical analysis of recent developments in US Federal corporate liability regimes, and proposes a generic framework that better tailors sanction schemes and monitoring systems to regulatee performance. The proposed framework efficiently induces corporate proactive compliance, while maintaining an optimal level of deterrence.
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Chapter 8: Corporate monitors: facilitating an efficient targeted monitoring system

New Approaches to Regulatory Enforcement

Sharon Oded


Recent corporate scandals have spurred the development of innovative enforcement mechanisms aimed at inducing corporate proactive compliance. One such mechanism, employed as part of the enforcement policies in the United States in recent years, includes the use of corporate monitors as “watchdogs” which seek to ensure corporate compliance. In Chapter 7, I explored the recently emerged enforcement policies of Deferred Prosecution Agreements (DPAs) and Non-Prosecution Agreements (NPAs) where the appointment of corporate monitors replaces traditional criminal proceedings. The analysis has shown that the evolving DPAs and NPAs policies are not free of practical challenges. Considerable criticism was raised, for instance, regarding corporate monitors’ appointment procedures and the need to better secure their independence and qualifications. Yet, as shown in Chapter 7, most points of criticism have been dealt with in the more recent policy developments which seem to prepare the ground for an improved utilization of corporate monitors in the battle against corporate misconduct. The overview provided in Chapter 7 revealed that corporate monitors are currently used in DPAs and NPAs policies during: (1) the ex-post enforcement phase, i.e., after a particular misconduct is detected; and (2) when corporate internal compliance schemes were proven weak and malfunctioning. In this chapter, I propose that the utilization of corporate monitors may be expanded: (1) to the ex-ante enforcement phase, i.e., before a particular misconduct is detected; and (2) when corporate internal compliance schemes are strong and robust.

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