The policy of giving prosecutorial discounts in deserving cases is meant to lighten the punishment that gets meted out. But what we really should be asking is: why are these firms being prosecuted and punished at all? THE CANADIAN PRESS/Adrien VeczanBad things can happen in any financial services firm. None are immune to internal errors or systemic failure – and transgressions by wayward employees are, unfortunately, an occasional hazard of real life.
This policy of giving prosecutorial discounts in deserving cases is meant to lighten the punishment that gets meted out. But what we really should be asking is: why are these firms being prosecuted and punished at all? Their non-compliance was inadvertent or the result of rogue employee misconduct that the firm did not encourage, countenance or know about.
Every client harmed by the error or misconduct has been identified, the extent of the harm they’ve suffered has been accurately determined, and the firm has fully compensated them. Currently, regulators are limited to issuing a “no action” letter when they approve of the firm’s response and want to hold off taking enforcement action. The letter forms part of the firm’s record but is not disclosed publicly. That’s less than ideal as it fails to provide transparency. It also doesn’t capitalize on the opportunity for encouraging others to follow the firm’s good example.
Perhaps there would be concerns about diminished deterrence – i.e., won’t this initiative foster a cavalier attitude toward supervision if companies can just clean up any messes when they occur and then walk away, penalty free?Story continues below advertisement