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The Justice Department on Monday spelled out new rules that would encourage more charges against individuals in corporate investigations, as the department seeks to address long-running criticism that it treats executive wrongdoing lightly.
The department released changes to the guidelines used by prosecutors in determining how to pursue criminal cases. Instead of long-standing language that says individuals aren’t necessarily charged in corporate investigations, the guidelines will now instruct prosecutors to “focus on wrongdoing by individuals from the very beginning of any investigation of corporate misconduct.”
Deputy Attorney General Sally Yates in a speech Monday further explained the changes and offered a full-throated defense of the shift, the broad outlines of which were announced earlier this year.
In September, Ms. Yates issued a memo to prosecutors recommending they consider a company to have cooperated with an investigation only if it turns over information about the actions of individuals at the firm.
Critics have said the changes could force companies to spend millions on extensive investigations. Others complain that the new policy could hurt the ability of company investigators to get to the bottom of potential misconduct because individuals would be reluctant to talk.
In her speech, Ms. Yates said the Justice Department expects companies to undertake investigations limited to the specific allegations at issue.
“The barriers to a successful white-collar prosecution can be substantial. We needed to clear away some of those barriers,” Ms. Yates said.
The changes to the U.S. Attorney’s manual make clearer the practical impact the shift is expected to have in individual investigations.
Gone from the manual, for example, is language saying that “federal prosecutors and corporate leaders typically share common goals” in preserving the integrity of the markets and protecting consumers and investors. In its place, the manual will now advise that “one of the most effective ways to combat misconduct is by holding accountable all individuals who engage in wrongdoing.”
The Justice Department also changed instructions for its lawyers who prosecute civil-fraud cases, including attempts to recover money allegedly owed to government health-care programs like Medicare. It now tells its attorneys that a decision on whether to sue an individual shouldn’t be based only on that individual’s ability to pay a judgment.
The changes provide a window into how the Obama administration is trying to respond to criticism leveled by fellow Democrats, including the party’s front-runner in the coming presidential primary election, Hillary Clinton. Mrs. Clinton said recently that in her administration, individuals within corporations, as well as the corporations themselves, would be vigorously prosecuted when wrongdoing occurs.
Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com
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