RC: In a broad sense, can you provide an explanation of how the Federal Sentencing Guidelines work in corporate misconduct cases?

Hedley: The Federal Sentencing Guidelines for Organisational Defendants – first adopted in 1991 and subsequently amended – are a set of uniform standards that judges consider in sentencing corporations and other entities that are convicted of federal crimes. A key element of the Guidelines is a federal court judge’s ‘carrot and stick’ approach, which manifests itself in the determination that management can reduce the likelihood of corporate misconduct by designing and implementing certain corporate compliance and ethics programme elements. In turn, judges can impose varying penalties on criminal organisations, creating incentives in the form of the substantial mitigation credit of a convicted criminal organisation’s sentence in those instances where it took rigorous steps to promote internal compliance, and develop an effective programme to prevent and detect violations of law. The Guidelines outline seven minimum compliance and ethics programme steps for organisations to follow if they want to mitigate penalties for corporate crimes. It is explicit in the Guidelines that organisations are expected to promote a culture of ethical conduct, design and tailor compliance programme elements based upon compliance risk, and periodically evaluate programme effectiveness.

RC: Can you highlight which aspects of the Federal Sentencing Guidelines organisations typically struggle with?

Oct-Dec 2015 Issue