SHARE THIS ARTICLE Share Tweet Post Email

Photographer: Samuel Corum/Anadolu Agency/Getty Images Photographer: Samuel Corum/Anadolu Agency/Getty Images

The most amazing thing about the Justice Department's new guidelines on prosecution of corporate crime is that the DOJ is effectively acknowledging there was a big problem with how it did things before.

In a memo released yesterday by the Deputy Attorney General, Sally Quillian Yates, the DOJ said it plans to focus on prosecuting the actual individuals who commit corporate crime, no matter how senior they may be within a company, rather than focusing only on civil cases against the companies themselves.

"One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing," the memo reads. This "deters future illegal activity, it incentivizes change in future corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public's confidence in our justice system."

These statements may seem glaringly obvious. But they represent a revolutionary cry on the part of the DOJ, which has spent the years since the 2008 financial crisis leveling billions of dollars in fines against banks around the world while charging almost zero actual bank executives with wrongdoing.

Even in cases where financial institutions were forced to plead guilty to criminal charges, it seemed that no actual people were inside the companies who could be held responsible for breaking the law. In 2013, to name one example of many, JPMorgan Chase agreed to pay $13 billion to settle civil fraud charges relating to the sale of mortgage securities leading into the financial crisis. The fine amounted to more than half of the bank's profit for the prior year, and the burden of paying it fell mainly to the bank's shareholders, rather than on traders or mortgage specialists, or their bosses, or their bosses' bosses, who apparently perpetrated the supposed fraud or ignored signs that it was happening.

After several years of harsh criticism about the way the DOJ was handling financial cases, former Attorney General Eric Holder seemed to respond by announcing in 2014 that "no company was too big to jail" and that his department wasn't going to be timid about charging big important banks with criminal conduct. The only problem with that idea was that it is difficult, if not impossible, to put a company in prison.

“Our mission here is not to recover the largest amount of money from the greatest number of corporations,” the DOJ's Yates is expected to say at a speech at NYU Law School today. To that end, the DOJ will require that companies under investigation provide names of individual wrongdoers to get credit for cooperating.

The public has become hardened and cynical, and the Justice Department will have to show through its actions that it plans to do things differently. The statute of limitations has run out on the majority of the most egregious cases stemming from the financial crisis, but there is always more to do. Wall Street is like the Silicon Valley of financial crime: It's always innovating.