[comments submitted re Federal Sentencing Guidelines for Organizations per this.]
From: RDShatt@aol.com
To: fsgocomments@ethics.org
Sent: 3/29/2012 3:25:06 P.M. Central Daylight Time
Subj: FSGO comments
Although the comment period has ended, I submit the below comments.
I. What has been learned about entity level liability
The FSGO deal with entity level liability. The 20th anniversary review of the FSGO ought to include a review of what new learning, if any, has been acquired about the uses, effectiveness, and appropriateness of entity level liability versus officer and employee individual liability for purposes of deterring corporate wrongdoing. If nothing new has been learned in the past twenty years, presumably the premise and foundation of the FSGO continue valid now as 20 years ago. If significant new learning has been acquired, perhaps the premise and foundation of the FSGO need a reexamination that takes into account the new learning.
II. Problem of settlements
The first "challenge" specified in the draft report is that the presence of effective ethics and compliance programs of large companies is not being given the recognition that is intended by the FSGO, because criminal cases are being detoured around judges by means of DPA's, NPA's and other administrative/settlement agreements.
The report points out this judicial bypass has the benefits of eliminating costs and risks of litigation and of avoiding potentially devastating collateral damage, often to innocent parties, that can result when a company is convicted of a crime.
Collateral damage to innocent parties is frequently present in the imposition of entity level liability (be it criminal or civil) and should generally be a factor in making a choice between entity level liability and officer and employee individual liability for the purpose of deterring corporate wrongdoing. The collateral damage potential that has undermined the use of FSGO is a manifestation of this. That manifestation could enter into the review suggested above about whether anything new is known or is present in making the choice between entity level liability and officer and employee individual liabiliity.
In extending the comment period to January 6, 2012, the ERC specifically referred to Judge Rakoff's rejection of the SEC/Citigroup proposed mortgage bond settlement and said that rejection provided something additional to think about in connection with the draft report's critique of settlements as undermining the FSGO's objectives. The link given by the ERC seems now to be a broken link. This November 29, 2011 Wall Street Journal article indicates the significant and difficult countervailing policy considerations that are raised by Judge Rakoff's rejection of the proposed settlement, and these are other than in the narrow confines of the FSGO. They include the societal value of determinations being made of whether wrongdoing has in fact taken place, the cost and amount of resources that are needed to make such determinations, and the "public questioning of the value of settlements, in which Wall Street firms can resolve potentially serious fraud allegations by paying back a small portion of investors' losses without admitting having done anything wrong "
I have written about how settlements and related litigation phenomenon impinge on the mission of business ethicists (besides in regard to the FSGO). For example, Judge Rakoff's belief about the public's clear interest in knowing the truth of what happened is relevant from an ethics and compliance perspective that judicial determinations of whether wrongdoing has in fact taken place can provide important information to the public and to corporate actors (both the corporate entity and officers and employees acting on behalf of the entity) about what corporate practices and activities are permissible and what behavior and actions are not permissible and are wrongful. Otherwise there can be lots of uncertainty.
The Advisory Group may limit itself to the FSGO and to a recommendation that there be "greater judicial oversight of proposed settlements to ensure they give proper consideration to FSGO criteria," and the final report may not touch on whether greater judicial oversight should be given to settlements for other ethics related purposes. If the Advisory Group limits itself to the FSGO, hopefully the ERC will find alternative ways to explore more fully how settlements and related litigation phenomena impinge on the business ethics mission and whether greater judicial oversight is needed for other than the narrow FSGO concern of the Advisory Group.
Respectfully submitted,
Robert Shattuck
Thursday, March 29, 2012
Wednesday, March 28, 2012
Mortgage banking industry (updated)
[email to Conference of State Bank Supervisors]
[email to American Association of Residential Mortgage Regulators ]
From: RDShatt@aol.com
To: dsaunders@aarmr.org
Sent: 3/27/2012 9:24:28 A.M. Central Daylight Time
Subj: Employee survey regarding robo-signing settlement
Dear Mr. Saunders,
I am not an academic or other professional
I am embarked on a project to investigate the views and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing. See this Statement of project.
I am considering as a case study the $25 billion settlement that has been made by Ally Financial, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America regarding the alleged mortgage-servicing and home-foreclosure abuses stemming from the so-called "robo-signing" practices. I have tentatively drafted a set of survey questions I would like to ask of employees of those banks. See Employee survey regarding robo-signing settlement.
I solicit from the American Association of Residential Mortgage Regulators any input that it would be willing to provide to my project.
Please contact me if there is anything here that the AARMR would care to pursue with me.
Thank you.
Sincerely,
Rob Shattuck
[form of email to state mortgage banking associations ]
From: RDShatt@aol.com
To:
Sent: 3/__/2012 ______.M. Central Daylight Time
Subj: Employee survey regarding robo-signing settlement
Dear __________,
I am not an academic or other professional.
I am embarked on a project to investigate the views and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing. See this Statement of project.
I am considering as a case study the $25 billion settlement that has been made by Ally Financial, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America regarding the alleged mortgage-servicing and home-foreclosure abuses stemming from the so-called "robo-signing" practices. I have tentatively drafted a set of survey questions I would like to ask of employees of those banks. See Employee survey regarding robo-signing settlement.
I solicit from the ______ Mortgage Bankers Association any input that it would be willing to provide to my project.
Please contact me if there is anything here that the Association would care to pursue with me.
Thank you.
Sincerely,
Rob Shattuck
[the Conference of State Bank Supervisors replied as follows]
From: CCross@csbs.org
To: BMatthews@csbs.org, rdshatt@aol.com
Sent: 3/29/2012 7:23:30 A.M. Central Daylight Time
Subj: Re: Employee survey regarding robo-signing settlement
Mr. Shattuck,
As a principal party in the Servicer settlement, CSBS believes it would be inappropriate for us to be of assistance in your study. Thank you for considering CSBS in your work.
Sincerely,
Chuck Cross
SVP Consumer Protection & Nondepository Supervision
Conference of State Bank Supervisors
From: RDShatt@aol.com
To: bmatthews@csbs.org
Sent: 3/27/2012 9:16:06 A.M. Central Daylight Time
Subj: Employee survey regarding robo-signing settlement
Dear Mr. Matthews,
I am not an academic or other professional.
I am embarked on a project to investigate the views and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing. See this Statement of project.
I am considering as a case study the $25 billion settlement that has been made by Ally Financial, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America regarding the alleged mortgage-servicing and home-foreclosure abuses stemming from the so-called "robo-signing" practices. I have tentatively drafted a set of survey questions I would like to ask of employees of those banks. See Employee survey regarding robo-signing settlement.
I solicit from the Conference of State Bank Supervisors any input that it would be willing to provide to my project. Please contact me if there is anything here that the CSBS would care to pursue with me.
Thank you.
Sincerely,
Rob Shattuck
To: bmatthews@csbs.org
Sent: 3/27/2012 9:16:06 A.M. Central Daylight Time
Subj: Employee survey regarding robo-signing settlement
Dear Mr. Matthews,
I am not an academic or other professional.
I am embarked on a project to investigate the views and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing. See this Statement of project.
I am considering as a case study the $25 billion settlement that has been made by Ally Financial, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America regarding the alleged mortgage-servicing and home-foreclosure abuses stemming from the so-called "robo-signing" practices. I have tentatively drafted a set of survey questions I would like to ask of employees of those banks. See Employee survey regarding robo-signing settlement.
I solicit from the Conference of State Bank Supervisors any input that it would be willing to provide to my project. Please contact me if there is anything here that the CSBS would care to pursue with me.
Thank you.
Sincerely,
Rob Shattuck
[email to American Association of Residential Mortgage Regulators ]
From: RDShatt@aol.com
To: dsaunders@aarmr.org
Sent: 3/27/2012 9:24:28 A.M. Central Daylight Time
Subj: Employee survey regarding robo-signing settlement
Dear Mr. Saunders,
I am not an academic or other professional
I am embarked on a project to investigate the views and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing. See this Statement of project.
I am considering as a case study the $25 billion settlement that has been made by Ally Financial, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America regarding the alleged mortgage-servicing and home-foreclosure abuses stemming from the so-called "robo-signing" practices. I have tentatively drafted a set of survey questions I would like to ask of employees of those banks. See Employee survey regarding robo-signing settlement.
I solicit from the American Association of Residential Mortgage Regulators any input that it would be willing to provide to my project.
Please contact me if there is anything here that the AARMR would care to pursue with me.
Thank you.
Sincerely,
Rob Shattuck
From: RDShatt@aol.com
To:
Sent: 3/__/2012 ______.M. Central Daylight Time
Subj: Employee survey regarding robo-signing settlement
Dear __________,
I am not an academic or other professional.
I am embarked on a project to investigate the views and information that multiple interested parties have concerning the subject of entity level liability versus officer and employee individual liability as a means to deter corporate wrongdoing. See this Statement of project.
I am considering as a case study the $25 billion settlement that has been made by Ally Financial, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America regarding the alleged mortgage-servicing and home-foreclosure abuses stemming from the so-called "robo-signing" practices. I have tentatively drafted a set of survey questions I would like to ask of employees of those banks. See Employee survey regarding robo-signing settlement.
I solicit from the ______ Mortgage Bankers Association any input that it would be willing to provide to my project.
Please contact me if there is anything here that the Association would care to pursue with me.
Thank you.
Sincerely,
Rob Shattuck
[the Conference of State Bank Supervisors replied as follows]
From: CCross@csbs.org
To: BMatthews@csbs.org, rdshatt@aol.com
Sent: 3/29/2012 7:23:30 A.M. Central Daylight Time
Subj: Re: Employee survey regarding robo-signing settlement
Mr. Shattuck,
As a principal party in the Servicer settlement, CSBS believes it would be inappropriate for us to be of assistance in your study. Thank you for considering CSBS in your work.
Sincerely,
Chuck Cross
SVP Consumer Protection & Nondepository Supervision
Conference of State Bank Supervisors
Monday, March 26, 2012
Employee survey re robo-signing settlement
In February, the attorneys general of 49 states and the federal government finalized their $25 billion settlement agreement with Ally Financial, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America regarding mortgage-servicing and home-foreclosure abuses stemming from the so-called "robo-signing" practices. This would make for a good case study for inquiry about how corporate level liability versus officer and employee personal liability affects officer and employee decisions and action to participate or not in corporate wrongdoing. It could be informative to pose survey questions to officers and employees at the five banks along the lines of the following:
1. Do you believe that wrongdoing took place in the robo-signing practices that caused loss and damage to homeowners to the extent of at least $25 billion and that warranted payment of $25 billion by the banks in settlement?
2. To what extent do you believe that officers and employees who participated in the wrongdoing believed at the time they were participating in wrongdoing?
3. In their deciding to participate in the wrongdoing, to what extent do you believe that officer and employee participants made estimates of the likelihood of the wrongdoing getting exposed and becoming a problem?
4. In their deciding to participate in the wrongdoing, to what extent do you believe that officer and employee participants made estimates of the likelihood that they would bear any personal liability for the wrongdoing if it was exposed and became a problem?
5. Do you think the prevalence of legal settlements that corporations make in which the corporation denies or does not admit that there was any wrongdoing impairs the ability of employees to decide whether something is wrong or not and whether they should participate or not? Turning that question around, do you think it would improve the ability of employees to decide what is right or wrong if the legal system was less tolerant of allowing the ambiguity created, on the one hand, by corporations paying big settlement amounts and, on the other hand, the public record being that the corporation does not admit it did anything wrong?
6. To what extent do you believe that corporations enter into legal settlements in which there is not in fact any wrongdoing?
7. Do you believe that officers and employees who participated in the robo-signing practices should bear some personal financial responsibility in the settlement?
8. Do you think a greater deterrent effect would be achieved if there was a general rule of law that there could be no liability (or legal settlement) of a corporation for wrongdoing unless there was some personal liability (or legal settlement) of officer and employee participants in the wrongdoing? In answering this question, please consider your personal reaction to reading this article compared to your personal reaction when you read this article.
9. Do you think state attorneys general are more interested in getting headlines from big settlements with corporations than they are in deterring corporate wrongdoing by making responsible officers and employees bear some financial responsibility for corporate wrongdoing?
10. What do you think your board of directors and upper level management think about the law imposing greater personal liability on officers and employees who participate in corporate wrongdoing?
11. To what extent do you believe there is waste and diversion of economic resources in much litigation that could be better spent in other ways to improve corporate behavior?
12. What do you think your corporate ethics officers think about corporate level liability versus officer and employee personal liability relative to improving corporate and employee behavior?
13. Do you think increased deterrence could be achieved through legal machinery that allows stockholders who bear the burden of a corporate payment of a judgment or settlement amount to recover a part of the same from officers and employees who participated in the wrongdoing?
1. Do you believe that wrongdoing took place in the robo-signing practices that caused loss and damage to homeowners to the extent of at least $25 billion and that warranted payment of $25 billion by the banks in settlement?
2. To what extent do you believe that officers and employees who participated in the wrongdoing believed at the time they were participating in wrongdoing?
3. In their deciding to participate in the wrongdoing, to what extent do you believe that officer and employee participants made estimates of the likelihood of the wrongdoing getting exposed and becoming a problem?
4. In their deciding to participate in the wrongdoing, to what extent do you believe that officer and employee participants made estimates of the likelihood that they would bear any personal liability for the wrongdoing if it was exposed and became a problem?
5. Do you think the prevalence of legal settlements that corporations make in which the corporation denies or does not admit that there was any wrongdoing impairs the ability of employees to decide whether something is wrong or not and whether they should participate or not? Turning that question around, do you think it would improve the ability of employees to decide what is right or wrong if the legal system was less tolerant of allowing the ambiguity created, on the one hand, by corporations paying big settlement amounts and, on the other hand, the public record being that the corporation does not admit it did anything wrong?
6. To what extent do you believe that corporations enter into legal settlements in which there is not in fact any wrongdoing?
7. Do you believe that officers and employees who participated in the robo-signing practices should bear some personal financial responsibility in the settlement?
8. Do you think a greater deterrent effect would be achieved if there was a general rule of law that there could be no liability (or legal settlement) of a corporation for wrongdoing unless there was some personal liability (or legal settlement) of officer and employee participants in the wrongdoing? In answering this question, please consider your personal reaction to reading this article compared to your personal reaction when you read this article.
9. Do you think state attorneys general are more interested in getting headlines from big settlements with corporations than they are in deterring corporate wrongdoing by making responsible officers and employees bear some financial responsibility for corporate wrongdoing?
10. What do you think your board of directors and upper level management think about the law imposing greater personal liability on officers and employees who participate in corporate wrongdoing?
11. To what extent do you believe there is waste and diversion of economic resources in much litigation that could be better spent in other ways to improve corporate behavior?
12. What do you think your corporate ethics officers think about corporate level liability versus officer and employee personal liability relative to improving corporate and employee behavior?
13. Do you think increased deterrence could be achieved through legal machinery that allows stockholders who bear the burden of a corporate payment of a judgment or settlement amount to recover a part of the same from officers and employees who participated in the wrongdoing?
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