Over-Enforcement

The evolution of over-enforcement is impacting various issues including the False Claims Act, the Foreign Corrupt Practices Act, and State Attorneys General.  Recently released research, Enforcement Gone Amok: The Many Faces of Over-Enforcement in the United States frames the over-enforcement landscape:

All elements of American society benefit when the legal system is used as intended by our Founders—namely, to prosecute and punish genuine wrongdoers whose actions have violated the law and caused injury or damage, guided by due process and the Eighth Amendment principle that the punishment should fit the crime. However, recent events have shown that government enforcement actions increasingly overstep reasonable bounds. Read More...

Other notable points include:

  • Over-enforcement occurs when individual government agencies exercise unfettered discretion to rely on novel or expansive interpretations of laws to coerce settlements. Companies that are targets of this practice cannot be certain that the courts will set aside these actions, given the often vague and broad statutory language that confers authority on these agencies.
  • Over-enforcement also occurs when the prosecution of wrongdoing is carried out by multiple regulators conducting duplicative investigations and legal actions, either simultaneously or in succession, which are directed at the very same conduct. Faced with these multiple assaults, companies often have little choice but to agree to whatever settlements those various government officials demand, even if the company has meritorious arguments against the underlying charges.
  • One consequence of both coercive and “pile-on” over-enforcement is large and duplicative fines and penalties that too often are disproportionate to the alleged wrongdoing. The fact that over-enforcement targets are typically corporations and not individuals does not excuse the abusive nature of the practice—“justice for all” must apply across the board.

Critical Reforms Road Map

Limits on multiple, duplicative investigations and prosecutions are essential to preserve fairness in our system of justice and our overall economy. One way to control government overreaching in this context is by ensuring that enforcement officials’ discretion is appropriately channeled in order to reduce their ability to make unjustified prosecutorial decisions. This should include:

  • Clear rules of the road so that individuals and businesses know what is legal and what is not, and prosecutors cannot impose retroactive liability based on vague standards.
  • Defendants should be given a fair chance to defend themselves, rather than being subjected to multiple, overlapping enforcement actions that leaves no choice and results in an unfair and unjust settlement.
  • Punishments should fit the offense and prohibit excessive demands that coerce settlements from the innocent.

Click below for detailed information on issues impacted by over-enforcement:

Suggested Resources

Research
  • Lighting the Way: FCA Reform and Compliance Program Credit

    Lighting the Way: FCA Reform and Compliance Program Credit

    June 27, 2018

    This paper contends that in order to encourage companies to create and sustain a culture of consistent compliance, particularly with regard to the federal False Claims Act, the U.S. Department of Justice should formalize a policy of offering credit for companies that implement effective compliance and ethics programs. Read More

  • The Great Myths of State False Claims Acts

    The Great Myths of State False Claims Acts

    February 28, 2018

    The 2018 update to "Great Myths of State False Claims Acts" shows that the whistleblowers' bar is continuing to capitalize on state qui tam False Claims Acts (FCAs), harvesting windfall awards from states and the federal government. The paper also points out that the dubious benefits of implementing a state FCA turn into a clear financial net negative when states allow their FCAs to fall out of compliance with federal standards. Read More

Additional Resources

All Results for Over-Enforcement

  1. WSJ Op-Ed Highlights Growing Costs of SEC Enforcement Actions

    October 29, 2015 | News and Blog

    William R. Baker III, a former associate director of the U.S. Securities and Exchange Commission Enforcement Division, and Latham & Watkins LLP partner Joel H. Trotter, highlight a U.S. Chamber report in a Wall Street Journal op-ed spotlighting the growing costs of SEC enforcement actions.... Read More

  2. ILR Summit Blog Series: Might excessive government fines be unconstitutional?

    October 23, 2015 | News and Blog

    A Q&A with Paul Clement, former U.S. Solicitor General and a partner at Bancroft PLLC, regarding his paper, Constitutional Constraints: Provisions Limiting Excessive Government Fines, to be presented at the 16th Annual Legal Reform Summit. ... Read More

  3. High-Profile Federal FCPA Probe into Wal-Mart Finds 'Little in Way of Major Offenses'

    October 19, 2015 | News and Blog

    The three-year Foreign Corrupt Practices Act (FCPA) investigation into Wal-Mart's activities in Mexico "has found little in the way of major offenses, and is likely to result in a much smaller case than investigators first expected."... Read More

  4. SEC Opens New Front in Enforcement Efforts, Reaches Muni Bonds Sale Settlement

    August 14, 2015 | News and Blog

    The U.S. Securities and Exchange Commission has opened "a new front" with its enforcement efforts, reaching a $20 million settlement with Edward Jones over the company's sale of municipal bonds.... Read More

  5. U.S. Chamber Commends Federal Court Scrutiny of FDA Enforcement Actions

    August 07, 2015 | Press Release

    ... Read More

  6. Sen. Warren Steps Ups Attacks on SEC; Wants More Aggressive Enforcers

    July 09, 2015 | News and Blog

    Already dogged by complaints of over-enforcement by its in-house administrative courts, the Securities and Exchange Commission (SEC) is now facing attacks from Sen. Elizabeth Warren, who would like SEC enforcement to be even more aggressive.... Read More

  7. Quicken Loans Sues DOJ; Claims 'Political Agenda' Driving Pressure to Settle

    April 20, 2015 | News and Blog

    Quicken Loans Inc. sued the U.S. Department of Housing and Urban Development and the Justice Department on Friday, saying in its complaint that the company is "fed up" with being pressured to settle over wrongdoing it didn't commit.... Read More

  8. The Growing Threat of 'Enforcement Slush Funds'

    March 25, 2015 | News and Blog

    Federal prosecutors and regulators have extraordinarily broad discretion to decide who to target in enforcement investigations, what to charge them with, and how much to demand as the price for a settlement. ... Read More

  9. New Faces of Lawsuit Abuse Video Highlights Federal Raid on Gibson Guitar

    December 26, 2014 | News and Blog

    ILR unveiled a new Faces of Lawsuit Abuse video this week, detailing the 2011 federal raid on Gibson Guitar for alleged violations of the Lacey Act. ... Read More

  10. VIDEO: Making A Federal Case Out of Three Small Fish

    December 03, 2014 | News and Blog

    FacesofLawsuitAbuse.org has unveiled a new video highlighting the plight of Florida fisherman John Yates – whose case is currently before the U.S. Supreme Court after he was charged by federal authorities for violating the Sarbanes-Oxley Act.... Read More