Nav: Home

Paper: 'No admit-No deny' settlements undercut accountability in civil enforcement

May 22, 2017

CHAMPAIGN, Ill. -- Should federal regulatory agencies such as the Securities and Exchange Commission require admissions of guilt from the targets of civil investigations? According to a new paper co-written by a pair of University of Illinois law professors, even though the federal watchdogs rely heavily on "No admit-No deny" settlements as an enforcement tool, the failure of regulatory bodies to require admissions of guilt can trigger claims of "rigged justice" and calls for greater accountability from the public.

Building on studies of the legal functions and effects of apologies, U. of I. law professors Verity Winship and Jennifer K. Robbennolt find that although the choice is often portrayed as binary - either an agency requires an admission of wrongdoing or it doesn't - the reality is more much nuanced.

"Holding big companies responsible has struck a chord with the public, so this paper is really about accountability in the context of civil enforcement through regulatory agencies like the SEC, the Environmental Protection Agency and the Department of Justice," said Winship, an expert on corporate litigation and securities enforcement.

An important piece is "really thinking about what it means to take responsibility," said Robbennolt, the Alice Curtis Campbell Professor of Law and co-director of the Illinois Program on Law, Behavior and Social Science.

"We're drawing on empirical work in psychology to think about what an admission of wrongdoing communicates, and how we can look in a more nuanced way at the type of admissions that are made - or not made," Robbennolt said. "We explore what it communicates when targets admit to particular facts, or admit that they had bad intentions or violated the law."

The paper speaks to the contrast between what companies will say publicly and what they legally agree to admit in a settlement, highlighting the Wells Fargo "ghost accounts" scandal as a signal example of a company that issued an almost pro forma nonapology apology while escaping from the thornier issue of having to admit wrongdoing.

"The CEO of Wells Fargo said before Congress that he was 'deeply sorry' for what happened, but you won't find any admission of misconduct in the company's settlements with regulatory agencies," Winship said. "The question is whether the regulators' actions against Wells Fargo hold it accountable. And, more generally, do we want civil agencies to make enforcement targets - like Wells Fargo - admit that they did something wrong?'"

The stakes are high because the choice of admissions policy goes to the heart of civil enforcement, the authors said.

"Civil enforcement by administrative agencies operates at the intersection of two sets of norms: the criminal law enforcement model, in which admissions of guilt are required, and the private settlement model, in which disclaimers of liability are an ordinary part of settlements between private parties," Winship said. "Civil enforcement policies sit uneasily at this intersection."

Despite that tension, Robbennolt and Winship both caution that settlements are an essential engine for administrative enforcement.

"We aren't making the argument that the watchdog agency should always require a full-throated admission of wrongdoing, in part because it would be very hard to have an efficient enforcement system if we didn't sometimes allow for a settlement without admitting wrongdoing," Winship said.

"Agencies have legitimate reasons to settle cases with and without admissions," Robbennolt said. "We try and approach the question of admissions from the agency's perspective in trying to negotiate cases like this. What should the agency know about what different kinds of admissions communicate? Who might care about those messages? And what are the implications of admissions for the target of enforcement? We hope to help agencies make decisions about admissions in a more nuanced and effective way."

The paper will be published in the Minnesota Law Review.

University of Illinois at Urbana-Champaign

Related Guilt Articles:

Survivors' near-miss experiences on 9/11 linked to post-traumatic stress
People who narrowly avoid disaster do not necessarily escape tragedy unharmed, and their knowledge of the victims' fate shapes how survivors respond to traumatic events, according to the results of a new paper by a UB psychologist that explores the effects of near-miss experiences associated with the 9/11 terrorist attacks.
To cheat or not to cheat? Researchers uncover the moral dilemmas of doping
Elite athletes are less likely to take banned substances if they consider the morality of what they are doing, and not just the health consequences of doping, according to a new study led by the University of Birmingham and funded by the World Anti-Doping Agency (WADA).
Responding to extremist attacks: For Muslim leaders, 'It's damned if you do, damned if you don't'
Muslim leaders face a perilous task when asked to publicly respond to violent attacks carried out by Muslim extremists.
How do we make moral decisions?
When it comes to making moral decisions, we often think of the golden rule: do unto others as you would have them do unto you.
Parental support linked to how well millennials transition to college life
Researchers show that how well parents or guardians support millennials' psychological needs prior to their transition to college is an important predictor of their psychological well-being as they adapt to college life.
More Guilt News and Guilt Current Events

Best Science Podcasts 2019

We have hand picked the best science podcasts for 2019. Sit back and enjoy new science podcasts updated daily from your favorite science news services and scientists.
Now Playing: TED Radio Hour

Erasing The Stigma
Many of us either cope with mental illness or know someone who does. But we still have a hard time talking about it. This hour, TED speakers explore ways to push past — and even erase — the stigma. Guests include musician and comedian Jordan Raskopoulos, neuroscientist and psychiatrist Thomas Insel, psychiatrist Dixon Chibanda, anxiety and depression researcher Olivia Remes, and entrepreneur Sangu Delle.
Now Playing: Science for the People

#537 Science Journalism, Hold the Hype
Everyone's seen a piece of science getting over-exaggerated in the media. Most people would be quick to blame journalists and big media for getting in wrong. In many cases, you'd be right. But there's other sources of hype in science journalism. and one of them can be found in the humble, and little-known press release. We're talking with Chris Chambers about doing science about science journalism, and where the hype creeps in. Related links: The association between exaggeration in health related science news and academic press releases: retrospective observational study Claims of causality in health news: a randomised trial This...