What Are the Merits of Taking a Hybrid Regulatory Approach Toward the Enforcement of Corporate Financial Crime in the United Kingdom and United States of America?

Diana Johnson

doi:10.1177/2631309x211050013

Abstract

This article focuses on the hybrid regulatory approaches used in both the USA and the UK for the enforcement of corporate financial crime. In particular, the article analyses the use of Deferred Prosecution Agreements, which typically impose a financial penalty and behavioral commitments on a corporate entity for a defined period of time in exchange for the deferral of a criminal prosecution. The article will examine the merits of the use of DPAs instead of the imposition of criminal penalties on a company. The article will also consider whether a hybrid use of competition law as well as, or instead of, financial regulation could achieve better outcomes for regulators when enforcing financial crime.

Highlights

This article examines the merits of adopting a hybrid regulatory approach in the United States of America (U.S.) and the United Kingdom (UK) toward the enforcement of corporate financial crime
The United States uses a wider variety of enforcement measures, namely the imposition of fines and the entry into Deferred Prosecution Agreements (DPAs) with offending institutions, than the UK has done in the past for financial crime
It is argued in this article that the regulators would have been more effective had they used a combination of competition law and if they had had alternative enforcement tools such as DPAs available to them to use against the infringing banks

Summary

Introduction

This article examines the merits of adopting a hybrid regulatory approach in the United States of America (U.S.) and the United Kingdom (UK) toward the enforcement of corporate financial crime. This article will commence by investigating what enforcement tools the UK and United States used to deal with the corporate financial crime of market manipulation following the LIBOR and FX crises. In the UK for the LIBOR and FX market manipulation offences the banks involved were sanctioned using civil financial regulations and individual traders were prosecuted using criminal law (the offense of conspiracy to defraud) rather than a competition law designed for cartels, which may have been better suited to the crime DPAs impose a financial penalty and behavioral commitments on a company

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