Financial Regulation And Corporate Crime: Sifting Through The Ashes Of The Financial Crisis

Author:Mr Gregory Glynn, Joanelle O'Cleirigh and Tom Browne
Profession:Arthur Cox

Do our financial and economic regulators have adequate enforcement powers or do their powers need to be supplemented by civil financial sanctions? Does our criminal law deal sufficiently with serious wrongdoing by corporate bodies or are there gaps that should be addressed?

These are some of the questions asked in an Issues Paper recently published by the Law Reform Commission. The Commission reviewed a number of reports published in the wake of the 2008 financial crisis and used the key findings of these reports to pose a number of questions about the adequacy of our criminal and regulatory laws.

The paper covers 12 areas and calls for views on a number of questions arising in each area. The areas covered include the:

criminal liability of corporate bodies; personal liability of corporate officers; possible introduction of an offence of reckless trading; and possible introduction of a general defence of due diligence. ATTRIBUTING CRIMINAL LIABILITY TO CORPORATE BODIES

Imposing criminal liability on corporate bodies for criminal offences has always proved difficult as the principles of criminal liability were historically developed with human beings in mind. The Commission is now looking at what precise test should be used to determine if criminal liability ought to be imposed on a corporate body in particular circumstances.

The Commission has identified three approaches used in other countries with similar legal systems to our own and will assess which approach can best be applied in the Irish context:

Vicarious liability: Under this approach, a corporate body, as an employer, can be held criminally responsible for the actions of employees carried out during the course of business. The identification doctrine: This attributes criminal liability directly to directors, senior management or majority shareholders who are seen as "the directing mind and will" of the corporate body. An organisational liability model: This holds an organisation criminally liable where it fails to implement proper policies and procedures which could have prevented or deterred the criminal offence. PERSONAL LIABILITY OF CORPORATE OFFICERS

Currently, only persons holding influential positions within organisations can be held criminally liable for offences committed by corporate bodies. The Commission is asking whether a broader approach should be taken to determining the...

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