“London Whale” Case Shows Difficulty of Assigning Individual Blame for Corporate Behaviors
The recent decision by the U.S. government to close its criminal case against traders at JPMorgan Chase charged with concealing billions of dollars in losses reveals how difficult it is to assign individual blame in a corporate matter. According to a July 21 account in The New York Times, prosecutors dropped their five-year case in reaction to new statements by whistleblower-trader Bruno Iksil, known as the London Whale for his outside bets. Iksil, who had previously blamed the prosecution’s low-level targets, threw the reliability of his testimony into doubt with new statements shifting the blame to the bank’s top executives. Two years ago, the Financial Conduct Authority (FCA) in London had also dropped its criminal case against the traders after a three-year effort, though the FCA did successfully press civil charges along with the SEC and banking regulators, which together exacted $920 million in penalties from the bank nearly four years ago.
Ever since September 2015, when then Deputy Attorney General Sally Yates set forth a new Individual Accountability Policy, the government has asked companies to name individual wrongdoers, rather than taking blame as a company. But the memo has not had the impact its architects had hoped. For example, a recent law professor blog on culpability for cases under the Foreign Corrupt Practices Act (not a factor in the JPMorgan case) notes that since the Yates memo, there have been some 20 cases, but not a single company employee has been charged.