[author: Stephen M. Juris]
Over the past several years, it has become commonplace to hear the general public and pundits alike grouse about the lack of criminal prosecutions or regulatory enforcement proceedings arising out of the financial dislocations of 2007 and 2008. There are many reasonable responses to these complaints, and almost all of them – as representatives of the Department of Justice and SEC emphasized in recent media statements – start with the actual facts and evidence. Not surprisingly, they also have more than a little to do with the law, and what it demands from prosecutors and regulators to differentiate mistakes, oversights, and collective failures of imagination and caution from outright fraud and criminal misconduct.
There is no ready resolution to these complaints, insofar as they really concern the national psyche, economy, and politics more than anything about the facts and circumstances of any particular investigation. Ironically, however, the current public debate over these issues wholly ignores a practical consideration that directly impacts regulators’ ability to vigorously pursue investigations in a world of limited resources and staffing: the ability to make important gatekeeper decisions regarding those investigations that are worth pursuing and those that are marginal and should be brought to a swift conclusion. Unfortunately, the political and professional environment – as well as basic human nature – often makes it difficult for prosecutors or regulators to walk away from marginal cases. This is a shame for a number of reasons, but from a public policy perspective it directly impacts the effectiveness of law enforcement more generally.
Of course, for the targets of those inquiries or defendants in ill-conceived cases, the consequences are direct and intensely personal. The stresses of defending one’s livelihood, and perhaps one’s freedom, are significant. So, too, are the financial costs. However, from an institutional perspective there may also be a significant social cost to proceeding with too much vigor in cases that are questionable or overly ambitious. In some cases, the lawyers investigating a matter become personally invested in the case, and cannot bear to see their hard work go to waste. In others, regulatory counsel or prosecutors come to the conclusion that wrong has been done by the target or defendant, despite concerns about what the law requires or the evidence demonstrates, and they are content to coax more out of the limited raw material on hand than they perhaps should. In reality, however, in most marginal cases the lawyers and agencies responsible for investigating and ferreting out misconduct simply do not know how to stop what they have already started. It is always easier to let an investigation languish or drift than to shut it down, and making the hard decision to cut one short frequently does not come with any immediate or obvious professional advantage. However, by spending time and energy aggressively pursuing marginal matters or pushing the law to its limits for weak cases, regulators run the risk of missing the boat on better cases that could benefit from additional attention.
Separating wheat from chaff requires both insight and an institutional culture that is tolerant of such decision making. Some law enforcement offices appear to do a better job of this than others. However, in a world of budget cuts and hiring freezes, the secret to more effective law enforcement may lie just as much with their willingness to halt wasteful inquiries as it does with their pursuit of more deserving cases to the bitter end.
ND: 4846-4992-3600, v. 1