Choosing punishment

Boston University Law Review

Volumn 92, Issue 2, 2012, Pages 577-641

  Baer, Miriam H ^a,b,c  

^a BROOKLYN LAW SCHOOL   (United States)

^b HARVARD LAW SCHOOL   (United States)

^c PRINCETON UNIVERSITY   (United States)

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[No Author keywords available]

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EID: 84860170543     PISSN: 00068047     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (323)

1. For the purposes of this Article, the term "punishment" includes all legally facilitated responses driven by moral outrage. See Daniel Kahneman, David A. Schkade & Cass R. Sunstein, Shared Outrage, Erratic Awards, in PUNITIVE DAMAGES 31, 32-33 (Cass R. Sunstein et al. eds., 2002). Accordingly, I use the term "punishment" primarily with regard to the retributive motivations that social science researchers have found when examining laypersons' attitudes towards sentencing and jury awards. I intend the term not to include sanctions designed solely to internalize costs and deter socially undesirable conduct. For a helpful discussion on the distinctions between "retributive" and other varieties of extra-compensatory sanctions,
2. see Dan Market, How Should Punitive Damages Work?, 157 U. PA. L. REV. 1383, 1403-16 (2009). Philosophers will rightfully argue that this is not the definition of "retribution" that various criminal theorists have erected to explain why the state can and should impose just deserts on culpable offenders.
3. See, e.g., David Gray, Punishment as Suffering, 63 VAND. L. REV. 1619, 1665 n.230 (2010) (deriding the "many politicians, pundits, practitioners, and others" who are not true retributivists but use the label to justify punishments unjustifiable by "any traditional theory of punishment, including retributivism"). This Article, however, does not focus on an idealized theory of punishment, but rather on the motivations that social science researchers have identified as driving punishment, as well as on how those motivations affect public institutions.
4. See, e.g., Max Minzner, Why Agencies Punish, 53 WM. & MARY L. REV. 853 (2012);
5. see also Ronald J. Allen & Larry Laudan, Deadly Dilemmas III: Some Kind Words for Preventative Detention, 101 J. CRIM. L. & CRIMINOLOGY 781, 787 (2011) (arguing that goals often associated with criminal law are in fact attributable to many types of state-sponsored regulation). For an example of the traditional view, wherein criminal law is treated as an exceptional source of punishment,
6. see Douglas N. Husak, Retribution in Criminal Theory, 37 SAN DIEGO L. REV. 959, 960 & n.4 (1999).
7. Obviously, no organization is solely one or the other. Many institutions, including law enforcement organizations, will adopt both regulatory and punishment-oriented goals, and many will seek retributive outcomes in addition to more common regulatory pursuits such as cost internalization. See, e.g., John Braithwaite, What's Wrong with the Sociology of Punishment, 7 THEORETICAL CRIMINOLOGY 5, 20-24 (2003) (explaining that prosecutors can, as Rudi Guiliani did during his tenure as the prosecutor for the Southern District of New York, act as regulators as well as punishers). For example, much of James Jacobs' work details the way in which prosecutors used "regulatory" methods to successfully oust organized crime from New York City's unions.
8. See, e.g., JAMES B. JACOBS, COLLEEN FRIEL & ROBERT RADICK, GOTHAM UNBOUND: HOW NEW YORK CITY WAS LIBERATED FROM THE GRIP OF ORGANIZED CRIME (1999).
9. Admittedly, this analysis assumes that public actors seek to maximize power and political capital. See, e.g., Sanford C. Gordon & Gregory A. Huber, The Political Economy of Prosecution, 5 ANN. REV. L. & Soc. Sci. 135, 136 (2009) (arguing that the study of prosecutorial behavior "requires, at its core, understanding prosecutors as political actors embedded in a complex strategic environment, where concerns about evaluation and management loom large"). For more on bounded rationality,
10. see generally Herbert A. Simon, A Behavioral Model of Rational Choice, 69 Q.J. ECON. 99 (1955).
11. See, e.g., Roberta Romano, The Sarbanes-Oxley Act and the Making of Quack Corporate Governance, 114 YALE L.J. 1521, 1529-42 (2005) (testing empirical claims made by supporters of Sarbanes-Oxley).
12. See infra Part I.C. Some might say that punishment bests regulation because of our collective "anti-administrative impulse." See Edward Rubin, The Myth of Accountability and the Anti-Administrative Impulse, 103 MICH. L. REV. 2073, 2075 (2005) (exploring the "unanalyzed hostility to the administrative state").
13. BERNARD E. HARCOURT, THE ILLUSION OF FREE MARKETS: PUNISHMENT AND THE MYTH OF NATURAL ORDER 9 (2011).
14. Edward L. Glaeser, Psychology and the Market 19 (Harvard Inst, of Econ. Research, Discussion Paper No. 2023, 2003) ("The real case for laissez-faire is not that the individual is perfect, but that the state will do worse than the private individual, and the strength of this case has always relied more on the fallibility of the state than on the perfection of markets.");
15. see also Edward L. Glaeser, Paternalism and Psychology, 73 U. CHI. L. REV. 133, 133-34 (2006) (arguing that the presence of error in private decision making does not necessarily justify public intervention because government actors are even more prone to error).
16. MICHAEL MOORE, PLACING BLAME: A GENERAL THEORY OF THE CRIMINAL LAW 152 (1997) (arguing the need for state institutions, and not individuals, to impose punishment on those who deserve it because "[r]etributive punishment is dangerous for individual persons to carry out, dangerous to their virtue and⋯ unclear in its justification").
17. An excellent discussion of this erosion can be found in the 1991 Yale Law Journal Symposium.
18. See, e.g., John C. Coffee, Jr., Paradigms Lost: The Blurring of the Criminal and Civil Law Models-And What Can Be Done About It, 101 YALE L.J. 1875, 1875 (1991);
19. Kenneth Mann, Punitive Civil Sanctions: The Middle Ground Between Criminal and Civil Law, 101 YALE L.J. 1795, 1797 (1991);
20. Franklin E. Zimring, Multiple Middlegrounds Between Civil and Criminal Law, 101 YALE L.J. 1901, 1903-04(1991). For a later analysis of the civil-criminal distinction and its connection to punishment theory,
21. see Carol S. Steiker, Punishment and Procedure: Punishment Theory and the Criminal-Civil Procedural Divide, 85 GEO. L.J. 775, 778-79 (1997).
22. For more contemporary critiques and analyses of potential middle grounds between criminal and civil law, see generally Darryl K. Brown, Criminal Law's Unfortunate Triumph over Administrative Law, 7 J.L. ECON. & POL'Y 657 (2011);
23. Issachar Rosen-Zvi & Talia Fisher, Overcoming Procedural Boundaries, 94 VA. L. REV. 79 (2008) (questioning and contrasting procedural protections inherent in criminal prosecutions and high-stakes civil cases brought against large corporations);
24. Dan Markel, Retributive Damages: A Theory of Punitive Damages as Intermediate Sanction, 94 CORNELL L. REV. 239, 241-42 (2009).
25. For discussions of excessive criminalization, see generally DOUGLAS HUSAK, OVERCRIMINALIZATION: THE LIMITS OF THE CRIMINAL LAW (2008);
26. Stuart P. Green, Why It's a Crime to Tear the Tag off a Mattress: Overcriminalization and the Moral Content of Regulatory Offenses, 46 EMORY L.J. 1533 (1997);
27. Erik Luna, The Overcriminalization Phenomenon, 54 AM. U. L. REV. 703 (2005).
28. JONATHAN SIMON, GOVERNING THROUGH CRIME 5 (2007) (critiquing the extent to which institutions use crime and fear of crime "to promote governance by legitimizing and/or providing content for the exercise of power").
29. For multiple discussions of various aspects of this phenomenon, see PROSECUTORS IN THE BOARDROOM (Anthony S. Barkow & Rachel E. Barkow eds., 2011).
30. For an earlier account, see ROBERTA S. KARMEL, REGULATION BY PROSECUTION 15 (1982). For related analyses,
31. see Christine Hurt, The Undercivilization of Corporate Law, 33 J. CORP. L. 361, 364 (2008),
32. Geraldine Szott Moorh, The Balance Among Corporate Criminal Liability, Private Civil Suits, and Regulatory Enforcement, 46 AM. CRIM. L. REV. 1459, 1461 (2009).
33. It further suggests that analyses of the relative strengths of the executive branch versus the judicial and legislative branches are also incomplete. For example, in the corporate context, Jonathan Macey has argued that the executive branch can move more swiftly than courts or the legislature in responding to public outrage over various corporate scandals. See Jonathan Macey, Executive Branch Usurpation of Power: Corporations and Capital Markets, 115 YALE L.J. 2416, 2418 (2006). The choosing punishment dynamic adds an additional gloss on Macey's account in that it indicates the units or departments that are most likely to capture the public's support and compete effectively for limited resources.
34. Cf Neil Vidmar & Dale T. Miller, Socialpsychological Processes Underlying Attitudes Toward Legal Punishment, 14 LAW & SOC'Y REV. 565, 565 (1980) (contending that punishment "defines social boundaries, vindicates norms, and provides an outlet for the psychological tensions aroused by deviant acts"). For a seminal discussion of the sociology of criminal punishment outside the corporate context,
35. see DAVID GARLAND, THE CULTURE OF CONTROL AND SOCIAL ORDER IN CONTEMPORARY SOCIETY (2002).
36. See, e.g., Mary Kreiner Ramirez, Prioritizing Justice: Combating Corporate Crime from Task Force to Top Priority, 93 MARQ. L. REV. 971, 972 (2010);
37. Andrew Ross Sorkin, Pulling Back the Curtain on Fraud Inquiries, N.Y. TIMES, Dec. 6, 2010, http://dealbook.nytimes.com/2010/12/06/pulling-back-the- curtain-on-fraud-inquiries/7ref=todayspaper ("[I]n the two years since the peak of the financial crisis, the government has not brought one criminal case against a big-time corporate official of any sort.").
38. See, e.g., RICHARD A. POSNER, A FAILURE OF CAPITALISM, at xiii-xiv (2010). The fact that such risk was interconnected or systemic undoubtedly played a large role as well.
39. See generally Steven Schwartz, Systemic Risk, 97 GEO. L.J. 193 (2008). For an argument that, outside of financial institutions, corporate governance was not a significant cause of the financial crisis,
40. see Brian R. Cheffins, Did Corporate Governance "Fail" During the 2008 Stock Market Meltdown? The Case of the S&P 500,65 Bus. LAW. 1, 3-4 (2009).
41. Pub. L. No. 111-203, H.R. 4173. Although Dodd-Frank ostensibly was intended to respond to weaknesses in the regulation of financial institutions, Congress included a number of corporate governance provisions (say-on-pay and proxy access, for example) that apply more generally to all publicly held companies. For a general criticism of overregulation of corporate governance, see A.C. Pritchard, The SEC at 70: Time for Retirement?, 80 NOTRE DAME L. REV. 1073, 1093 (2005) (critiquing the "deluge" of statutes and regulations in response to accounting fraud scandals);
42. Stephen M. Bainbridge, Corporate Governance and U.S. Capital Market Competitiveness, (forthcoming), available at http://papers.ssrn.com/sol3/papers. cfm?abstract-id=1696303 (criticizing overregulation of corporate governance as the primary cause of the United States' competitive decline in international capital markets).
43. For an account of how Dodd-Frank and its regulatory progeny have fueled a mini-legal industry, see Eric Dash, Feasting on Paperwork, N.Y. TIMES, Sept. 8, 2011, at B1 (describing the ways in which corporate and financial regulation have spawned whole new industries to help corporations meet regulatory and statutory requirements).
44. Cf. John C. Coffee, Jr., Law and the Market: The Impact of Enforcement, 156 U. PA. L. REV. 229, 258 (2007) (observing that enforcement intensity is difficult to measure by inputs because objective data can be misleading in either direction).
45. See Vikramaditya S. Khanna, Corporate Crime Legislation: A Political Economy Analysis, 82 WASH. U. L.Q. 95, 97 (2004) (citing a similar assumption with regard to corporate crime legislation).
46. IAN AYRES & JOHN BRAITHWAITE, RESPONSIVE REGULATION: TRANSCENDING THE DEREGULATION DEBATE 26 (1992). Braithwaite argued elsewhere that regulators should adopt persuasion "as a strategy of first choice" for dealing with corporate wrongdoers.
47. See JOHN BRAITHWAITE, TO PUNISH OR PERSUADE: THE ENFORCEMENT OF COAL MINE SAFETY 109 (1985). Braithwaite's analysis, however, focused on the optimal mix of persuasion and punishment for society, without regard for the notion that public actors, and the public they served, might derive particular benefits - psychological or otherwise - from choosing punishment over regulation.
48. For further theoretical accounts consistent with this view, see Lawrence M. Solan, Statutory Inflation and Institutional Choice, 44 WM. & MARY L. REV. 2209, 2211-15 (2003) (observing that "[r]emedial statutes are interpreted liberally [and] penal statutes are interpreted narrowly" under standard interpretive canons and theorizing a model of "statutory inflation" whereby agencies seek expansive interpretation of civil remedies, which then lead to more expansive interpretations of parallel criminal statutes);
49. J. Kelly Strader, White Collar Crime and Punishment: Reflections on Michael, Martha, and Milberg Weiss, 15 GEO. MASON L. REV. 45, 55 & n.48 (2007) ("[W]hen the grounds for criminalization are suspect, the government should instead rely upon civil or administrative remedies." (citing Luna, supra note 17, at 714)).
50. See Gary S. Becker, Crime and Punishment: An Economic Approach, 76 J. POL. ECON. 169, 172-80 (1968);
51. Kenneth G. Dau-Schmidt, An Economic Analysis of the Criminal Law as a Preference-Shaping Policy, 1990 DUKE L.J. 1, 1-2.
52. Scholars have made much of the difference between systems that proscribe all conduct (so-called "complete deterrence") and those that seek only "optimal deterrence" through internalization of the conduct's harm. See John C. Coffee, Jr., Does "Unlawful" Mean "Criminal"? Reflections on the Disappearing Tort/Crime Distinction in American Law, 71 B.U. L. REV. 193, 199 (1991);
53. (citing Keith N. Hylton, Punitive Damages and the Economic Theory of Penalties, 87 GEO. L. J. 421, 421 (1998)). It is not clear that this distinction matters under a rational actor model. If public actors are rational, then they will seek complete deterrence only when absolute cessation of the underlying conduct is optimal. (Pubitemid 128429266)
54. See Fred S. McChesney, Desperately Shunning Science, 71 B.U. L. REV. 281, 284-85 (1991) (explaining that criminal sanctions represent the legislature's determination that the conduct in question provides little or no social benefit).
55. See Richard Craswell, Deterrence and Damages: The Multiplier Effect and Its Alternatives, 97 MICH. L. REV. 2185, 2186 (1999).
56. Paul H. Robinson & John M. Darley, Does Criminal Law Deter? A Behavioral Science Investigation, 24 OXFORD J. LEGAL STUD. 173, 174 (2004) ("[E]ven if they know the legal rules and perceive a cost-benefit analysis that urges compliance, potential offenders commonly cannot or will not bring such knowledge to bear to guide their conduct in their own best interests, such failure stemming from a variety of social, situational, or chemical influences.").
57. For an overview of behavioral economics' implications for deterrence, see generally Richard H. McAdams & Thomas S. Ulen, Behavioral Criminal Law and Economics, in 3 ENCYCLOPEDIA OF LAW & ECONOMICS: CRIMINAL LAW AND ECONOMICS 403 (Nuno Garoupa ed., 2d ed. 2009). The social norms literature has also demonstrated the important difference between punishment and regulation insofar as punishment expresses an additional moral "signal," which in turn spurs second-order community sanctions (shaming, banishment) and third-order internal sanctions such as conscience restraints.
58. For more on the value (and limitations) of such norms, see Robert E. Scott, The Limits of Behavioral Theories of Law and Social Norms, 86 VA. L. REV. 1603, 1603-04 (2000).
59. Janice Nadler & Mary R. Rose, Victim Impact Testimony and the Psychology of Punishment, 88 CORNELL L. REV. 419, 423 (2003) (highlighting an "emerging consensus that people's punishment judgments are guided to a large degree by harm-based retributive psychology").
60. See Cass R. Sunstein, On the Psychology of Punishment, 11 SUP. CT. ECON. REV. 171, 173-75 (2003) ("[PJeople are intuitive retributivists. Their moral intuitions are inconsistent with the economic theory of deterrence. Those intuitions are grounded in outrage.");
61. see also Milton C. Regan, Jr., Moral Intuitions and Organizational Culture, 51 ST. LOUIS U. L.J. 941, 944 (2007) (arguing that the way in which individuals respond to morally problematic situations "involves automatic non-conscious cognitive and emotional reactions rather than conscious deliberation"). Regan goes on to explain that moral intuitions drive moral reasoning. See id. ("[W]e do not engage in moral reasoning in order to arrive at a conclusion. Instead, we do so in order to justify a conclusion that we have already reached."); Vidmar & Miller, supra note 21, at 570 ("In many instances the punishment reaction itself may be the primary response, which is followed, not preceded, by the attribution of responsibility.").
62. Paul H. Robinson & John M. Darley, Intuitions of Justice: Implications for Criminal Law and Justice Policy, 81 S. CAL. L. REV. 1, 1 (2007) (suggesting, based on social science evidence, that intuitive judgments, rather than deliberative reasoning, drive punishment decisions). Scholars and researchers disagree on whether our intuitions about moral culpability are stable and widely held or fluid, divergent, and culturally-based.
63. Compare Paul H. Robinson & Robert Kurzban, Concordance and Conflict in Intuitions of Justice, 91 MINN. L. REV. 1829, 1892 (2007) ("[A]vailable evidence suggests that human intuitions of justice about core wrongdoing⋯ are deep, predictable, and widely shared."),
64. with Donald Braman, David A. Hoffman & Dan M. Kahan, Some Realism About Punishment Naturalism, 77 U. CHI. L. REV. 1531, 1603-04 (2010) (attacking claims that punishment intuitions are widely shared throughout society and arguing instead that intuitions vary and are affected by "immense cultural heterogeneity").
65. Cass R. Sunstein, Daniel Kahneman, David Schkade & Liana Ritov, Predictably Incoherent Judgments, 54 STAN. L. REV. 1153, 1164-65 (2002) ("[P]unitive damages are an expression of indignation or outrage on a scale of dollars.").
66. See Dan M. Kahan, The Secret Ambition of Deterrence, 113 HARV. L. Rev. 413, 497 (1999).
67. Sunstein and others have found that subjects asked to impose punitive damages often fail to consider the probability that the wrongdoer will be caught and punished, a key component of damages under a deterrence scheme. Instead, lay punishers focus solely on their view of the "wrongness" of the actor's conduct. See, e.g., Sunstein, supra note 41, at 174. Although Sunstein's piece focuses on jury-awarded punitive damages, he observes that the psychological findings have implications for criminal and administrative enforcement actions. See id. at 172-73. In a later study, Jeffrey Rachlinski and Forest Jourden confirm that laypersons' views of wrongfulness alter their feelings on the appropriate length of criminal sentences for a crime, depending on how that crime is contrasted with other crimes. See Jeffrey J. Rachlinski & Forest Jourden, The Cognitive Components of Punishment, 88 CORNELL L. REV. 457, 485 (2003).
68. For experimental evidence regarding criminal punishments, see Joseph E. Jacoby & Francis T. Cullen, The Structure of Punishment Norms: Applying the Rossi-Berk Model, 89 J. CRIM. L. & CRIMINOLOGY 245, 296 (1998). After surveying their data, the authors conclude, "Within the broad principle that more serious crimes ought to be punished more severely, for most offenses a broad range of punishments receives support. Almost any specific punishment will find some supporters and many opponents." Id. at 305 (emphasis added); see also Kahneman, Schkade & Sunstein, supra note 1, at 36-39 (finding that punitive damage awards are unpredictable even when "shared outrage" is present across jurors). (Pubitemid 128443574)
69. Dan Kahan calls this the "sticky norms problem." See Dan M. Kahan, Gentle Nudges vs. Hard Shoves: Solving the Sticky Norms Problem, 67 U. CHI. L. REV. 607, 607 (2000) (explaining how social norms can undermine legislative efforts to increase punishment). This limitation partially explains why punishment is a choice for actors seeking public support and resources, but not the only choice.
70. see also Scott E. Sundby, War and Peace in the Jury Room: How Capital Juries Reach Unanimity, 62 HASTINGS L.J. 103, 119-20 & n.41 (2010) (citing studies demonstrating that "when groups deliberate and an initial disagreement exists, group members tend not to move toward a 'middle' position, but actually become even more extreme in the direction of their original leanings").
71. Overcriminalization is a prominent theme in criminal law scholarship. Darryl Brown helpfully collects the literature analyzing the political economy of criminal law in Democracy and Decriminalization, 86 TEX. L. REV. 223, 223 nn.1-2 (2007) (challenging the overcriminalization thesis with empirical evidence that states have decriminalized a number of vice and related crimes).
72. Rachel E. Barkow, Federalism and the Politics of Sentencing, 105 COLUM. L. REV. 1276, 1277 (2005) ("The politics of sentencing over the past three decades have consistently produced longer prison terms and an escalation in tough-on-crime rhetoric, regardless of whether crime rates have been going up or down.").
73. See William J. Stuntz, The Pathological Politics of Criminal Law, 100 MICH. L. REV. 505, 507 (2001) ("[A] 11 change in criminal law seems to push in the same direction - toward more liability."). For a visual depiction of incarceration's upward trajectory in the United States,
74. see NICOLA LACEY, THE PRISONERS' DILEMMA 171 (2008);
75. Doron Teichman, The Market for Criminal Justice: Federalism, Crime Control, and Jurisdictional Competition, 103 MICH. L. REV. 1831, 1832 (2005) (documenting the rise in the incarceration rate from 1980 through 2002). Although the current recession has deeply affected state budgets, it is far from clear that the recession will affect the federal law enforcement and regulatory institutions most concerned with corporate governance. See Barkow, supra note 52, at 1301-02.
76. See Donald C. Langevoort, Taking Myths Seriously: An Essay for Lawyers, 74 CHI.-KENT L. REV. 1569, 1573 (2000) (explaining that individuals naturally tend to be overly confident in the inferences they draw to avoid "doubt and uncertainty," in part because doubt and uncertainty can be "paralyzing").
77. On the public's desire for narratives that accord with desires for vindication, see generally WILLIAM FLESCH, COMEUPPANCE: COSTLY SIGNALING, ALTRUISTIC PUNISHMENT, AND OTHER BIOLOGICAL COMPONENTS OF FICTIONS (2009) (explaining why readers prefer vindication narratives in fiction).
78. Tom Tyler suggests that this is one of the reasons the public enjoys law enforcement oriented television shows such as CSI. The programs provide a form of closure and certainty insofar as the wrongdoers are always apprehended and punished. See Tom R. Tyler, Viewing CSI and the Threshold of Guilt: Managing Truth and Justice in Reality and Fiction, 115 YALE L.J. 1050, 1065 (2006). For a critique of the use of the term "closure" in popular death penalty discourse,
79. see Susan A. Bandes, Victims, "Closure," and the Sociology of Emotion, 72 LAW & CONTEMP. PROBS. 1, 1-4 (2009).
80. Cf Jonathan R. Macey, The Distorting Incentives Facing the U.S. Securities and Exchange Commission, 33 HARV. J.L. & PUB. POL'Y 639, 639-41 (2010) (explaining how political pressures influence the SEC's decision to pursue high-profile salient cases).
81. One should keep in mind the distinction between the law and emotions literature and the behavioral and cognitive psychology literature, which examines biases and heuristics that distort rational decision making in predictable ways. See Kathryn Abrams & Hila Keren, Who's Afraid of Law and the Emotions?, 94 MINN. L. REV. 1997, 2018-20 (2010). This distinction is blurred somewhat by research on the "affect heuristic," which measures the extent to which certain emotions replace rational decision making.
82. See, e.g., Cass R. Sunstein, Hazardous Heuristics, 70 U. CHI. L. REV. 751, 769-72 (2003). The emotions and heuristics literatures, in turn, overlap but differ somewhat from the psychological research portraying punishment as an automatic, intuition-driven response rather than a deliberative, calculative one.
83. See, e.g., John M. Darley, Citizens' Assignments of Punishments for Moral Transgressions: A Case Study in the Psychology of Punishment, 8 OHIO ST. J. CRIM. L. 101, 104-08 (2010) (explaining two-track processes - intuition- and reason-based - that guide decision making in differing contexts).
84. See Stephen J. Choi & A.C Pritchard, Behavioral Economics and the SEC, 56 STAN. L. REV. 1, 26-27 (2003) (arguing that combination of availability heuristic and "the political imperative to 'do something'" in responses to crises often results in overregulation);
85. Eric A. Posner & Adrian Vermeule, Crisis Governance in the Administrative State: 9/11 and the Financial Meltdown of 2008, 76 U. CHI. L. REV. 1613, 1639 (2009).
86. Stephen M. Bainbridge, Dodd-Frank: Quack Federal Corporate Governance Round II, 95 MINN. L. REV. 1779, 1821 (2011);
87. Larry E. Ribstein, Commentary, Bubble Laws, 40 HOUS. L. REV. 77, 77-78 (2003);
88. Samuel H. Pillsbury, Emotional Justice: Moralizing the Passions of Criminal Punishment, 74 CORNELL L. REV. 655, 673 (1989) ("Under a retributive system, the effort to suppress all varieties of decisionmaking anger or sympathy is neither morally justified, nor practically feasible. Emotional reactions to penal issues are part of basic human nature.").
89. Emotions, indeed, may explain inclinations to punish even when punishment is itself costly to the punisher. See Ernst Fehr & Simon Gachter, Altruistic Punishment in Humans, 415 NATURE 137, 139 (2002).
90. See, e.g., FED. R. EVID. 403. On the failure of trial procedures to eliminate intuition-based punishment, see William Bowers et al., Jurors' Failure to Understand or Comport with Constitutional Standards in Capital Sentencing: Strength of Evidence, 46 CRIM. L. BULL. 1147, 1149-51 (2010) (demonstrating through an extensive survey that many jurors in capital trials reach sentencing decisions during the guilt phase of trial, despite admonitions not to do so).
91. I do not mean to suggest a caricature that pits "emotional" punishers against "rational" regulators. As I indicate throughout the piece, many public actors are likely to perform different functions within the same job. See Braithwaite, supra note 4, at 23 (observing the "hybridity" of punishment and regulation). Nor do I deny that emotions drive legal decision making in numerous contexts. See, e.g., Susan A. Bandes, Emotions, Values, and the Construction of Risk, 156 U. PA. L. REV. 421, 430-33 (2008);
92. Todd E. Pettys, The Emotional Juror, 76 FORDHAM L. REV. 1609, 1612-13 (2007). My point, however, is that we seem far more willing to accept the emotional components of punishment than we are to accept emotion's place in the formulation and implementation of other forms of public action.
93. This "emotional benefit" may also be attributable to the fact that public actors impose punishment primarily through litigation. See, e.g., Macey, supra note 20, at 2440 (observing that the executive branch's most effective weapon, in comparison to Congress, is "its ability to litigate"). Litigation, in turn, may permit public actors to act more quickly, appear more decisive, and therefore generate greater public support. Dan M. Kahan, Reallocating Interpretive Criminal-Lawmaking Power Within the Executive Branch, 61 LAW & CONTEMP. PROBS. 47, 48 (1998) ("Congress gets plenty of credit when it appears to react decisively to crime, but the marginal benefit it gets from addressing crime problems in a considered and thoroughgoing fashion is essentially nil."). Kahan's observation fueled his larger argument that binding authority to interpret broad federal criminal statutes ought to rest with officials in the Department of Justice (whom Kahan portrayed as clear-eyed regulators), rather than with the "cowboy" prosecutors in local United States Attorneys' offices. See id.
94. Cf Evan J. Criddle, Fiduciary Administration: Rethinking Popular Representation in Agency Rulemaking, 88 TEX. L. REV. 441, 448-49 (2010) (proposing fiduciary agency model that obligates agencies to make both deliberate and deliberative decisions);
95. Randy J. Kozel & Jeffrey A. Pojanowski, Administrative Change, 59 UCLA L. REV. 112, 115 (2011) (describing a mode of "prescriptive reasoning" whereby agencies make decisions "by weighing evidence, utilizing technical expertise, and making policy choices").
96. See 5 U.S.C. §§ 551-559, 701-706 (2006); Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48 (1983) ("We have frequently reiterated that an agency must cogently explain why it has exercised its discretion in a given manner⋯." (citations omitted)). "[W]hatever else the [APA] set out to achieve, it aspired to strengthen administrative procedures and judicial review to prevent arbitrary agency action." Lisa Schultz Bressman, Beyond Accountability: Arbitrariness and Legitimacy in the Administrative State, 78 N.Y.U. L. REV. 461, 473 (2003);
97. see also Rachel E. Barkow, The Ascent of the Administrative State and the Demise of Mercy, 121 HARV. L. REV. 1332, 1337 (2008) (describing administrative law's "core ideas of predictable processes, reasoned decisionmaking, and judicial review").
98. OIRA exists within the Office of Management and Budget and "reviews all collections of information by the Federal Government. OIRA also develops and oversees the implementation of government-wide policies in several areas, including information quality and statistical standards. In addition, OIRA reviews draft regulations under Executive Order 12866." About OIRA, OFF. OF MGMT. & BUDGET, http://www.whitehouse.gov/omb/inforeg-administrator (last visited Nov. 6,2011) (explaining the role of OIRA).
99. See Cass R. Sunstein, Cognition and Cost-Benefit Analysis, in COST-BENEFIT ANALYSIS: LEGAL, ECONOMIC, AND PHILOSOPHICAL PERSPECTIVES 223, 224 (Matthew D. Adler & Eric A. Posner eds., 2000) ("My basic suggestion is that cost-benefit analysis is best defended as a means of overcoming predictable problems in individual and social cognition."). Sunstein writes elsewhere, "By drawing attention to costs and benefits, it should be possible to spur the most obviously desirable regulations, to deter the most obviously undesirable ones, to encourage a broader view of consequences, and to promote a search for least-cost methods of achieving regulatory goals."
100. CASS R. SUNSTEIN, THE COST-BENEFIT STATE: THE FUTURE OF REGULATORY PROTECTION 6-7 (2002).
101. RICHARD L. REVESZ & MICHAEL A. LIVERMORE, RETAKING RATIONALITY: HOW COST-BENEFIT ANALYSIS CAN BETTER PROTECT THE ENVIRONMENT AND OUR HEALTH 21 (2008) ("At every stage in the development of cost-benefit analysis, commentators and decisionmakers committed to deregulation have faithfully pursued the goals of placing cost-benefit analysis at the center of the administrative state and shaping it towards their agenda."). Capture occurs when special interest groups use money and power to influence and persuade administrative agencies not to act in ways that further the public's overall welfare. The combination of elected legislators who require economic resources to maintain their positions, on the one hand, and regulatory agencies that enjoy considerable regulatory power but depend on the legislature for political and budgetary resources, on the other, provides a recipe for a regulatory state that works to advantage well-organized yet narrowly focused political interest groups⋯.
102. STEVEN P. CROLEY, REGULATION AND PUBLIC INTERESTS: THE POSSIBILITY OF GOOD REGULATORY GOVERNMENT 9 (2008);
103. see also Nicholas Bagley & Richard L. Revesz, Centralized Oversight of the Regulatory State, 106 COLUM. L. REV. 1260, 1284-92 (2006) (contending that regulatory capture results in deregulation);
104. Rachel E. Barkow, Insulating Agencies: Avoiding Capture Through Institutional Design, 89 TEX. L. REV. 15, 18, 42-64 (2010) (proposing institutional mechanisms more likely to reduce agency capture by well-funded and tightly organized industry groups).
105. A number of academics agree that the purpose of regulatory reform "is to make regulation more effective and productive - to counter the influence of narrow interest groups in bending rules to their selfish advantage, to avoid policies that are wasteful or counterproductive, and to get more environmental bang for the policy buck." Christopher C. DeMuth & Douglas H. Ginsburg, Rationalism in Regulation, 108 MICH. L. REV. 877, 880 (2010); see also REVESZ & LIVERMORE, supra note 72, at 3 ("There is a temptation to rely on gut-level decisionmaking in order to avoid economic analysis, which, to many, is a foreign language on top of seeming cold and unsympathetic. For government to make good decisions, however, it cannot abandon reasoned analysis.").
106. A "theory" of punishment "seeks to tell us what punishment is [and] what the necessary and sufficient conditions for something to be punishment are" whereas a justification for punishment "seeks to tell us when it is morally (or politically or in any other normative way) legitimate to inflict punishment." LEO ZAIBERT, PUNISHMENT AND RETRIBUTION 7 (2006).
107. See Alice Ristroph, How (Not) to Think like a Punisher, 61 FLA. L. REV. 727, 738-39 (2009).
108. See Richard S. Frase, Punishment Purposes, 58 STAN. L. REV. 67, 68 (2005) ("Sentences can serve many purposes, and these purposes are often in conflict.").
109. Marc Miller, Purposes at Sentencing, 66 S. CAL. L. REV. 413, 417 (1992). The two purposes of sentencing that tend to garner the most attention are retribution and deterrence.
110. Matthew Haist, Comment, Deterrence in a Sea of "Just Deserts": Are Utilitarian Goals Achievable in a World of "Limiting Retributivism"?, 99 J. CRIM. L. & CRIMINOLOGY 789, 799 (2009). The American Law Institute has been revising the Model Penal Code's sentencing provisions. For an account of the Model Penal Code's revised approach toward retribution, as well as a critique of its embrace of limited retributivism, see Ristroph, supra note 76, at 731-32.
111. Haist, supra note 79, at 799. Certainly, not all scholars embrace the retributive justification. See, e.g., Russell L. Christopher, Deterring Retributivism: The Injustice of "Just" Punishment, 96 Nw. U. L. REV. 843, 975-76 (2002).
112. Michael T. Cahill, Punishment Pluralism, in RETRIBUTIVISM: ESSAYS ON THEORY AND POLICY 25, 28-31, 36-38 (Mark D. White ed., 2011).
113. The literature is far too dense to provide an adequate account here. For a sampling of some of the twentieth century treatments of desert, see JOHN BRAITHWAITE, CRIME, SHAME, AND REINTEGRATION 7 (1989);
114. JOEL FEINBERG, Justice and Personal Desert, in DOING AND DESERVING: ESSAYS IN THE THEORY OF RESPONSIBILITY 55, 56 (1970);
115. ROBERT NOZICK, PHILOSOPHICAL EXPLANATIONS 374-75 (1981);
116. Jean Hampton, The Retributive Idea, in FORGIVENESS AND MERCY 111, 124-43 (Jeffrie G. Murphy & Jean Hampton eds., 1988);
117. Henry M. Hart, Jr., The Aims of the Criminal Law, 23 LAW & CONTEMP. PROBS. 401, 406-11 (1958).
118. For later discussions of retribution and other justifications for punishment, see generally CRIMINAL LAW CONVERSATIONS (Paul H. Robinson et al. eds., 2009).
119. An example is the famous "harm principle" enunciated by John Stuart Mill and later amplified by Joel Feinberg. See JOEL FEINBERG, HARM TO OTHERS 11 (1984);
120. JOHN STUART MILL, ON LIBERTY 80 (David Bromwich & George Kateb eds., Yale Univ. Press 2003) (1859).
121. See, e.g., Stephen J. Morse, Reason, Results, and Criminal Responsibility, 2004 U. III. L. REV. 363, 365 (pinning responsibility on action and not results).
122. See Louis KAPLOW & STEVEN SHAVELL, FAIRNESS VERSUS WELFARE 303 (2002) ("[T]he theory does not include a definition of what constitutes wrongful behavior deserving punishment.");
123. Dennis J. Baker, The Impossibility of a Critically Objective Criminal Law, 56 McGiLL L.J. 349, 349 (2011) (arguing that objective standards of moral wrong "are impossible to identify").
124. Samuel W. Buell, Reforming Punishment of Financial Reporting Fraud, 28 CARDOZO L. REV. 1611, 1613 (2007) ("[Proportionality is a requirement across all major white-collar cases; like cases should be treated alike, different cases should be treated differently and criminal sentences should not vary substantially according to nonrelevant factors (such as the location of prosecution, identity of sentencing judge, or heat of public emotion).");
125. see also Susan R. Klein & Jordan M. Steiker, The Search for Equality in Criminal Sentencing, 2002 SUP. CT. REV. 223, 269.
126. Guyora Binder, Making the Best of Felony Murder, 91 B.U. L. REV. 403, 430-31 (2011) (contrasting "instrumental" and "comparative" proportionality). Jurists have drawn on both concepts as well. Compare Tison v. Arizona, 481 U.S. 137, 149 (1987) ("The heart of the retribution rationale is that a criminal sentence must be directly related to the personal culpability of the criminal offender."), with Blakely v. Washington, 542 U.S. 296, 331 (2004) (Breyer, J., dissenting) ("Simple determinate sentencing has the virtue of treating like cases alike, but it simultaneously fails to treat different cases differently."), and United States v. Johnson, 273 F. App'x 95, 100-01 (2d Cir. 2008) (observing that the "hallmark" of common law sentencing "is that like cases are treated alike").
127. Rachel E. Barkow, The Court of Life and Death: The Two Tracks of Constitutional Sentencing Law and the Case for Uniformity, 107 MICH. L. REV. 1145, 1146-49 (2009) (questioning the Supreme Court's failure to exercise robust proportionality review in non-capital cases);
128. John F. Stinneford, Rethinking Proportionality Under the Cruel and Unusual Punishments Clause, 97 VA. L. REV. 899, 903 (2011).
129. See Cass R. Sunstein, Incommensurability and Valuation in Law, 92 MICH. L. REV. 779, 782-85, 818-20 (1994). For the same reason, studies that tabulate annual enforcement actions or fines in the securities context tell us relatively little about whether the government has imposed sufficient retribution. The Department of Justice's annual performance self-review, which focuses primarily on the Department's previously set numerical targets, also reflects this evaluative gap: Success for the Department is highlighted when justice is served fairly and impartially and the public is protected⋯.[T]rying to isolate the effects of our work from other factors that affect outcomes over which the Department has little or no control presents a formidable challenge⋯. As a result, we have focused on more targeted measures of programmatic performance⋯
130. DEP'T OF JUSTICE, ANNUAL PERFORMANCE AND ACCOUNTABILITY REPORT, FY 2011, at § II-1 (2011), available at http://www.justice.gov/ag/annualreports/ pr2011/par2011.pdf.
131. Expressive overdetermination is Professor Dan Kahan's term for when policy discourse enables divergent cultural groups to find affirmation of their own worldviews in a given policy. See Dan M. Kahan, The Cognitively Illiberal State, 60 STAN L. REV. 115, 145 (2007). Kahan views this as a potentially positive development, since it allows for otherwise "illiberal" groups to engage with each other in a participatory democracy. See id. at 145-50.
132. Three-strikes laws are statutes that impose mandatory and often draconian sentences on third-time felons. See, e.g., David Schultz, No Joy in Mudville Tonight: The Impact of "Three Strike" Laws on State and Federal Corrections Policy, Resources, and Crime Control, 9 CORNELL J.L. & PUB. POL'Y 557, 559 (2000). Despite strong criticism from practitioners and academics, three-strikes laws and "get tough" regimes enjoy at least superficial public support.
133. See Jeffrey Bellin, Is Punishment Relevant After All? A Prescription for Informing Juries of the Consequences of Conviction, 90 B.U. L. REV. 2223, 2233 (2010) (observing that California's three-strikes statute was "directly enacted by voters");
134. Francis T. Cullen, Bonnie S. Fisher & Brandon K. Applegate, Public Opinion About Punishment and Corrections, 27 CRIME & JUST. 1, 38-40 (2000) (suggesting that public support for habitual offender laws, although palpable, may not be particularly deep).
135. A number of articles have addressed the lack of useful metrics for measuring and assessing prosecutorial policy. See, e.g., Stephanos Bibas, Prosecutorial Regulation Versus Prosecutorial Accountability, 157 U. PA. L. REV. 959, 983-91 (2009);
136. Russell M. Gold, Promoting Democracy in Prosecution, 86 WASH. L. REV. 69, 72-73 (2011);
137. Ronald F. Wright, How Prosecutor Elections Fail Us, 6 OHIO ST. J. CRIM. L. 581, 589-91 (2009).
138. At the federal level, see Daniel C. Richman, "Project Exile" and the Allocation of Federal Law Enforcement Authority, 43 ARIZ. L. REV. 369, 400 (2001). The Department of Justice is required to file annual reports of its performance, and engage in strategic planning. See, e.g., 31 USC § 1115 (2006). The Department's goals, however, are quite abstract (e.g., "protect the rights of the American people"), and the strategic targets are internally generated and quantitative in nature (e.g., "complete X investigations of Y category of crime"). See DEP'T OF JUSTICE, supra note 95, at § 1-13-14. Accordingly, although these reports may aid higher-level officials in cutting bureaucratic slack, they do not appear to impose much restraint on the Department's overall ability to set and pursue a retributive agenda.
139. Professor Cahill proposes to fix this shortcoming by theorizing his own consequentialist framework for applying retributive justice. See Michael T. Cahill, Retributive Justice in the Real World, 85 WASH. U. L. REV. 815, 822 (2007).
140. This is not to say that punishers are not subject to congressional oversight or budgetary constraints. As Dan Richman has observed, legislators can exercise political control in a number of ways: "By strategically using oversight hearings, budgetary controls, agency design, and restrictions on investigative options, legislators could moderate enforcement in sensitive areas without sacrificing the symbolic and deterrent benefits of broad prohibitions and without tackling the challenges of ex ante specification." Daniel Richman, Political Control of Federal Prosecutions: Looking Back and Looking Forward, 58 DUKE L.J. 2087, 2093 (2009). Nevertheless, given the greater ability to measure and test regulatory goals, legislator-principals can more easily control regulator-agents as opposed to punisher-agents. For an overview of the various ways in which legislatures use the political process to shape regulatory policy,
141. see, for example, Matthew C. Stephenson, Information Acquisition and Institutional Design, 124 HARV. L. REV. 1422, 1462-82 (2011) (describing various strategies legislators adopt in order to ensure that regulators carry out their wishes).
142. Thus, even the SEC's more measured critics have asked "whether the SEC⋯ is competitively fit to act as a regulator in a capital marketplace that is now so institutional and global." Donald C. Langevoort, The SEC, Retail Investors, and the Institutionalization of the Securities Markets, 95 VA. L. REV. 1025, 1027 (2009).
143. Consider Stephen Choi's comment, which reflects a common theme in securities and corporate governance scholarship: "Lawmakers often regulate first and ask questions later, ignoring both the potential downsides of regulation as well as the possibility of market-based alternative solutions to market failures." Stephen J. Choi, A Framework for the Regulation of Securities Market Intermediaries, 1 BERKELEY Bus. L.J. 45, 48 (2004).
144. Behavioral economists' study of systematic cognitive error arguably has undermined the market default argument. See Rachlinski & Jourden, supra note 46, at 459-60. Even here, however, some contend that markets can overcome decision-making error as well as, if not better than, regulators. See Choi & Pritchard, supra note 60, at 50-51 (arguing that competition among regulators may reduce regulation infected by biases and heuristics). Other research suggests that intermediaries or agents in business organizations are less likely to exhibit certain biases. See, e.g., Jennifer Arlen, Matthew Spitzer & Eric Talley, Endowment Effects Within Corporate Agency Relationships, 31 J. LEGAL STUD. 1, 5 (2002) (reporting experimental research showing that use of corporate agents greatly reduced alleged "endowment effect" in corporate business transactions).
145. See, e.g., John C. Coffee, Jr., Market Failure and the Economic Case for a Mandatory Disclosure System, 70 VA. L. REV. 717, 728-29 (1984) (justifying mandatory disclosure rules by reference to market failure). The preference for markets and private ordering, in turn, relates back to Ronald Coase's mid-twentieth-century prediction that - "in the absence of significant externalities, information asymmetries, or garden-variety transaction costs - the law can (and should) defer to the attempts of private parties to allocate rights and obligations optimally." Arlen, Spitzer & Talley, supra note 109, at 2
146. (citing R. H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1, 10 (1960)). Not surprisingly, Arlen et al. conclude, "[Therefore,] corporate law should generally avoid imposing immutable (or 'mandatory') rules, except when necessary to address conventional market failures⋯." Id.
147. Some see this as a form of regulatory "minimalism." See Charles F. Sabel & William H. Simon, Minimalism and Experimentalism in the Administrative State, 100 GEO. L.J. 53, 55-56 (2011) (arguing that regulatory "experimentalism" is more pervasive than most presume and also more desirable than minimalist approaches).
148. See Richard A. Posner, An Economic Theory of the Criminal Law, 85 COLUM. L. REV. 1193, 1196 (1985) (explaining fraud liability as a protective device for markets). But see HARCOURT, supra note 11, at 136-39, 147 (critiquing Posner's account because it does not explain "why certain categories of purportedly efficient behavior are criminalized" and because it ignores the complex "institutional framework" on which voluntary market transactions rely).
149. Kenworthey Bilz, The Puzzle of Delegated Revenge, 87 B.U. L. REV. 1059, 1059-60 (2007) (exploring the justifications for a state monopoly on punishment);
150. Ric Simmons, Private Criminal Justice, 42 WAKE FOREST L. REV. 911, 918 (2007) ("[T]he provisioning of criminal justice services, at least beyond the field of law enforcement, remains the exclusive province of the state.").
151. In her recent article, Jodi Short provides empirical evidence that the public's discontent with regulation results not from concerns about inefficiency or administrative cost but rather from a deep-seated fear of state power. See Jodi Short, The Paranoid Style in Regulatory Reform, 63 HASTINGS L.J. (forthcoming 2012) (manuscript at 2-3, 47-58), available at http://papers.ssrn. com/sol3/papers.cfm?abstract-id=1739015.
152. For an introduction to the notion of criminal punishment as an expressive tool, see Dan M. Kahan, What Do Alternate Sanctions Mean?, 63 U. CHI. L. REV. 591, 594-605 (1996) (explaining the "expressive dimension" of punishment);
153. Dan Markel, Are Shaming Punishments Beautifully Retributive? Retributivism and the Implications for the Alternative Sanctions Debate, 54 VAND. L. REV. 2157, 2191 (2001) (describing "theories of penal encounter centering on retribution and social denunciation"). Treating retribution separately from punishment's expressive function does not lessen the state's claim. Retributivists embrace the state's involvement because its involvement (and use of procedure) distinguishes the imposition of "just deserts" from ordinary vengeance. See, e.g., MOORE, supra note 14, at 152.
154. Roger Fairfax has documented instances in which state governments sometimes farm out the prosecution function to private attorneys. See Roger A. Fairfax, Jr., Delegation of the Criminal Prosecution Function to Private Actors, 43 U.C. DAVIS L. REV. 411, 416 (2009). Ric Simmons and David Sklansky have also observed the rise of private policing. See Simmons, supra note 114, at 919;
155. David A. Sklansky, The Private Police, 46 UCLA L. REV. 1165, 1168(1999).
156. Alon Harel, Why Only the State May Inflict Criminal Sanctions: The Case Against Privately Inflicted Sanctions, in CRIMINAL LAW CONVERSATIONS, supra note 82, at 129;
157. Mary Sigler, Private Prisons, Public Functions, and the Meaning of Punishment, 38 FLA. ST.U.L. REV. 149, 171(2010).
158. See Rachel E. Barkow, Administering Crime, 52 UCLA L. REV. 715, 751-52 (2005); Stuntz, supra note 53, at 529-33 (distinguishing federal and local legislators' incentives).
159. For a discussion of the various shortcomings of the adjudicative, case-by-case approach, see Rachel E. Barkow, The Prosecutor as Regulatory Agency, in PROSECUTORS IN THE BOARDROOM, supra note 19, at 177, 195-96 (discussing accountability and consistency concerns). The choosing punishment dynamic is also consistent with Robert Kagan's theory of "adversarial legalism," whereby policymaking and dispute resolution occur primarily through "lawyer-dominated litigation."
160. See ROBERT A. KAGAN, ADVERSARIAL LEGALISM 3 (2002). Kagan distinguishes adversarial legalism from "other methods of governance and dispute resolution that rely instead on bureaucratic administration, or on discretionary judgment by experts or political authorities." Id.
161. An instructive example is (now former) Acting Assistant Attorney General Rita Glavin's testimony in March 2009 before the House Committee on Financial Services. See Federal and State Enforcement of Financial Consumer and Investor Protection Laws: Hearing Before the H. Comm. on Financial Services, 111th Cong. (2009) (statement of Rita Glavin, Acting Assistant Att'y General, Criminal Division, Department of Justice). Another example is Glavin's testimony before the House Judiciary Committee one month later. See Proposals to Fight Fraud and Protect Taxpayers: Hearing Before the H. Comm. on the Judiciary, 111th Cong. 12 (2009)
162. [hereinafter Proposals to Fight Fraud and Protect Taxpayers] (statement of Rita Glavin, Acting Assistant Att'y Gen., Criminal Division, Department of Justice). In both instances, Glavin was seeking to persuade Congress to enlarge the DOJ's statutory and financial power.
163. For a discussion of Sarbanes-Oxley's criminal and enforcement-related provisions, see Frank O. Bowman, III, Pour Encourager les Autres? The Curious History and Distressing Implications of the Criminal Provisions of the Sarbanes-Oxley Act and the Sentencing Guidelines Amendments That Followed, 1 OHIO ST. J. CRIM. L. 373, 392-411 (2004). Some of these provisions had little to do with the accounting fraud that triggered Sarbanes-Oxley.
164. See, e.g., Matt A. Vega, The Sarbanes-Oxley Act and the Culture of Bribery: Expanding the Scope of Private Whistleblower Suits to Overseas Employees, 46 HARV. J. ON LEGIS. 425, 438-40 (2009).
165. For more on the SEC's whistleblower program as enhanced by Dodd-Frank, see Whistleblower Program, SEC. & EXCHANGE COMMISSION (Aug. 12, 2011), http://www.sec.gov/spotlight/dodd-frank/whistleblower.shtml;
166. see also Douglas W. Baruch & Nancy N. Barr, The SEC's Whistleblower Program: What the SEC Has Learned from the False Claims Act About Avoiding Whistleblower Abuses, HARV. BUS. L. REV. (July 25, 2011), available at http://www.hblr.org/2011/07/the-secs-whistleblower-program-what-the-sec-has- learned-from-the-false-claims-act-about-avoiding-whistleblower-abuses/.
167. See, e.g., Rachel E. Barkow, Federalism and Criminal Law: What the Feds Can Learn from the States, 109 MICH. L. REV. 519, 521-23 (2011) (examining allocations of power between local and more centralized prosecuting authorities within states and the federal government).
168. See, e.g., U.S. SEC. & EXCH. COMM'N, OFFICE OF INVESTIGATIONS, INVESTIGATION OF FAILURE OF THE SEC TO UNCOVER BERNARD MADOFF'S PONZI SCHEME 364 (2009), available at http://www.sec.gov/news/studies/2009/oig-509.pdf ("[Doria] Bachenheimer also attributed the SEC's failure to uncover Madoffs Ponzi scheme to a lack of resources: 'The resource issues and the challenges that we were facing⋯. We had to buy our own legal pads. We had to buy our own pens. It got to the point where we didn't have paper for the printers⋯. We had cases that had remained open for years.'");
169. U.S. SEC. & EXCH. COMM'N, OFFICE OF INSPECTOR GEN., INVESTIGATION OF THE SEC'S RESPONSE TO CONCERNS REGARDING ROBERT ALLEN STANFORD'S ALLEGED PONZI SCHEME 26 (2010), available at http://www.sec.gov/news/studies/2010/oig-526.pdf;
170. see also Jayne W. Barnard, Evolutionary Enforcement at the Securities and Exchange Commission, 71 U. PiTT. L. REV. 403, 407 (2010) (concluding that Khuzami and his lieutenants "walked into a[n Enforcement] Division that was under-resourced, demoralized, and insecure").
171. See Donald C. Langevoort, The SEC and the Madoff Scandal: Three Narratives in Search of a Story, 2009 MICH. ST. L. REV. 899, 902.
172. Eric Lichtblau et al., F.B.I. Struggling to Handle Wave of Finance Cases, N.Y. TIMES, Oct. 19,2008, at A1.
173. Jeffrey Fagan & Tracey L. Meares, Punishment, Deterrence and Social Control: The Paradox of Punishment in Minority Communities, 6 OHIO ST. J. CRIM. L. 173, 226 (2008) (observing an increase in punishment resources for street crime and a consequent defunding of social institutions that might otherwise mitigate or moderate crime);
174. Ronald F. Wright, Parity of Resources for Defense Counsel and the Reach of Public Choice Theory, 90 IOWA L. REV. 219, 257-58 (2004).
175. For more on FERA's drafting and quick passage, see Matthew Titolo, Retroactivity and the Fraud Enforcement and Recovery Act of 2009, 86 IND. L.J. 257, 298 (2011).
176. Subsequent testimony by one of the co-sponsors of the bill, Charles Grassley, demonstrates the bill's intended breadth. See Protecting American Taxpayers: Significant Accomplishments and Ongoing Challenges in the Fight Against Fraud: Hearing Before the S. Comm. on the Judiciary, 112th Cong. (2011) (statement of Sen. Charles Grassley, Member, S. Comm. on the Judiciary), available at 2011 WLNR 1939026.
177. See Michael Lewis & David Einhorn, Op-Ed., How to Repair a Broken Financial World, N.Y. TIMES, Jan. 3, 2009, at WK10;
178. Stavros Gadinis, The SEC and the Financial Industry: Evidence from Enforcement Against Broker-Dealers 6 (Aug. 11, 2009) (unpublished manuscript), available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=1333717.
179. Cf. David Zaring, The Southern District of New York Offers Riches, CONGLOMERATE BLOG (Aug. 16, 2010), http://www.theconglomerate.org/2010/08/-the- southern-district-of-new-york-offers-riches.html (demonstrating strong job prospects for prosecutors from the Southern District of New York office, which has also taken on a number of well publicized corporate prosecutions). For an earlier study,
180. see Richard T. Boylan & Cheryl X. Long, Salaries, Plea Rates, and the Career Objectives of Federal Prosecutors, 48 J.L. & ECON. 627, 627 (2005) (finding that prosecutors in high-private-salary districts were less likely to agree to plea bargains than counterparts in other districts).
181. Larry E. Ribstein, Agents Prosecuting Agents, 7 J.L. ECON. & POL'Y 617, 630-31 (2011) (arguing that prosecutors retain incentives to try famous or notorious cases in order to become prominent in the field and seek lucrative private sector jobs). These divergent accounts suggest that the private sector may provide differing incentives for lawyer-regulators and lawyer-prosecutors. If corporate law firms hire prosecutors because the firms value aggression and strong litigation skills, then prosecutors have every incentive to win trials and strike hard bargains. By the same token, if corporate law firms hire legal regulators because the firms desire negotiating skills and network contacts with other regulators, then they are likely to value the lawyers' abilities to negotiate and persuade. Accordingly, the revolving door may encourage aggressive behavior among prosecutors while simultaneously rewarding more conciliatory behavior by lawyer-regulators.
182. See Coffee, supra note 29, at 264-65 (citing Illegal Insider Trading: How Widespread Is the Problem and Is There Adequate Criminal Enforcement?: Hearing Before the S. Comm. on the Judiciary, 109th Cong. 4 (2006) (statement of Linda Thomsen, Director, Division of Enforcement, Securities and Exchange Commission)) (discussing the number of enforcement actions brought over a five-year period). Insider trading continues to be an enforcement priority.
183. See, e.g., SEC Enforcement Actions: Insider Trading Cases, U.S. SEC. & EXCHANGE COMMISSION, http://www.sec.gov/spotlight/insidertrading/cases. shtml (last modified Oct. 6, 2011) (touting a forty-three percent increase in the number of cases filed from the previous year).
184. The SEC (a) eliminated the "penalty pilot program" that had required Enforcement Division attorneys to obtain the SEC's approval prior to negotiating penalties with corporate defendants and (b) streamlined the process for initiating investigations and serving subpoenas. See Zachary A. Goldfarb, Schapiro 's SEC Expected to Step up Enforcement, WASH. POST, Feb. 4, 2009, at D01 (analyzing Schapiro's then-expected termination of the penalty pilot program);
185. Marisa McQuitken, Rising Stock: SEC Enforcement Lawyers Are Happily Picking up the Pace, LEGAL TIMES, Mar. 2, 2009, at 1 (discussing the Enforcement Division's increased role in general);
186. Luis A. Aguilar, Comm'r, U.S. Sec. & Exch. Comm'n, Sustainable Reform Prioritizing Long-Term Investors Requires the Right Orientation (Feb. 5, 2010), available at http://www.sec.gov/news/speech/2010/spch0205101aa.htm.
187. Robert Khuzami, Dir., Div. of Enforcement, U.S. Sec. & Exch. Comm'n, Remarks Before the New York City Bar: My First 100 Days as Director of Enforcement (Aug, 5, 2009), available at http://www.sec.gov/news/speech/2009/ spch080509rk.htm.
188. See Jenny Anderson & Zachery Kouwe, The Enforcer, N.Y. TIMES, Feb. 9, 2010, at B1;
189. Louise Story, The Generals Who Ended Goldman's War, N.Y. TIMES, July 18, 2010, at BUI;
190. Edward Wyatt, S.E.C. Puts Wall Street on Notice, N.Y. TIMES, Apr. 19,2010, at B1.
191. Joel Feinberg, The Expressive Function of Punishment, reprinted in PHILOSOPHICAL PERSPECTIVES ON PUNISHMENT 25, 26-27 (Gertrude Ezorsky ed., 1972) (distinguishing "punishment" from penalties that are "mere 'price-tags' attached to certain types of behavior that are generally undesirable, so that only those with especially strong motivation will be willing to pay the price").
192. See Wyatt, supra note 152, at Bl. Promising punishment and imposing it are two very different things. Accordingly, although Khuzami has employed a substantial amount of punishment rhetoric in his defense of the Enforcement Division, commentators (most notably, Judge Jed Rakoff of the Southern District of New York) have roundly criticized the Division's practice of securing fines from financial institutions with no admission of guilt. See, e.g., Peter J. Henning, Behind Rakoffs Rejection of Citigroup Settlement, N.Y. TIMES, Nov. 28, 2011, http://dealbook.nytimes.com/2011/11/28/behind-judge-rakoffs-rejection-of- s-e-c-citigroup-settlement/ (explaining Judge Rakoff s reaction to the SEC's policy of settling cases without any admission of guilt).
193. Judge Posner succinctly defines agency costs as follows: A principal hires an agent to do a job that the principal could not do as well (or as cheaply) himself. The principal wants the agent to strive to do the best possible job at the lowest possible cost⋯. But the agent is a self-interested person just like the principal. Unless the principal can evaluate and monitor the agent's performance with great accuracy and adjust the agent's compensation accordingly, the agent is unlikely to be perfectly faithful to the principal. He will slack off, or divert revenues to himself, or both. Richard A. Posner, Are American CEOs Overpaid, and, if so, What if Anything Should Be Done About It?, 58 DUKEL. J. 1013, 1015 (2009).
194. Steven Ramirez, The End of Corporate Governance Law: Optimizing Regulatory Structures for a Race to the Top, 24 YALE J. ON REG. 313, 316 n.23 (2007) ("[0]ptimal corporate governance would minimize net agency costs."
195. (citing John E. Core et al., Is U.S. CEO Compensation Inefficient Pay Without Performance?, 103 MiCH. L. REV. 1142, 1160-61 (2005))).
196. See, e.g., Thomas Joo, Narrative, Myth, and Morality in Corporate Legal Theory, 2009 MICH. ST. L. REV. 1091, 1092;
197. Edward B. Rock, Saints and Sinners: How Does Delaware Corporate Law Work?, 44 UCLA L. REV. 1009, 1047 (1997); (Pubitemid 127445733)
198. Lynn A. Stout, On the Proper Motives of Corporate Directors (or, Why You Don't Want to Invite Homo Economicus to Join Your Board), 28 DEL. J. CORP. L. 1, 15 (2003). In a related vein, a number of scholars have discussed the positive effects of social norms on corporate behavior.
199. See, e.g., Troy A. Paredes, A Systems Approach to Corporate Governance Reform: Why Importing U.S. Corporate Law Isn't the Answer, 45 WM. & MARY L. REV. 1055, 1086-87 (2004) (discussing informal reputational sanctions visited upon corporate managers in the wake of various scandals and mishaps);
200. David A. Skeel, Jr., Shaming in Corporate Law, 149 U. PA. L. REV. 1811, 1824-25 (2001). (Pubitemid 33656797)
201. See Jonathan R. Macey, The Politicization of American Corporate Governance, 1 VA. L. & Bus. REV. 10, 24 (2006) ("[A] robust market for corporate control is vitally important as a corporate mechanism for monitoring and disciplining managers.");
202. see also Stephen J. Choi & Eric L. Talley, Playing Favorites with Shareholders, 75 S. CAL. L. REV. 271, 273-74 (2002) ("[T]he takeover market creates a powerful incentive for managers to constrain their own rapacity in the interests of self-preservation.").
203. ALBERT O. HIRSCHMAN, EXIT, VOICE AND LOYALTY: RESPONSES TO DECLINE IN FIRMS, ORGANIZATIONS, AND STATES 15 (1970) ("The customer who, dissatisfied with the product of one firm, shifts to that of another, uses the market to defend his welfare or to improve his position; and he also sets in motion market forces which may induce recovery on the part of the firm that has declined in comparative performance.");
204. see also Lawrence A. Cunningham, Behavioral Finance and Investor Governance, 59 WASH. & LEE L. REV. 767, 768-69.
205. JONATHAN R. MACEY, CORPORATE GOVERNANCE: PROMISES KEPT, PROMISES BROKEN 118(2008).
206. See William Bratton & Michael Wachter, The Case Against Shareholder Empowerment, 158 U. PA. L. REV. 653, 726-27 (2010).
207. For a criticism of statutes that impose such restraints, see, for example, MACEY, supra note 163, at 118. For the response that legal takeover defenses do not undermine market discipline as much as one might expect, see Marcel Kahan & Edward B. Rock, How I Learned to Stop Worrying and Love the Pill: Adaptive Responses to Takeover Law, 69 U. CHI. L. REV. 871, 896-97 (2002).
208. Paul Rose, Common Agency and the Public Corporation, 63 VAND. L. REV. 1355, 1359 (2010) ("Under the standard agency theory guiding efforts to empower shareholders, increased monitoring by shareholder-principals of manager-agents will reduce agency costs created by management shirking and expropriation of private benefits⋯.").
209. See LUCIAN BEBCHUK & JESSE FRIED, PAY WITHOUT PERFORMANCE: THE UNFULFILLED PROMISE OF EXECUTIVE COMPENSATION 23-44 (2004).
210. ADOLF A. BERLE, JR. & GARDINER C. MEANS, THE MODERN CORPORATION AND PRIVATE PROPERTY 84-90 (1935).
211. See generally MANCUR OLSON, THE LOGIC OF COLLECTIVE ACTION: PUBLIC GOODS AND THE THEORY OF GROUPS (1971). Macey's argument is slightly more nuanced. He contends that dispersed holdings render shareholders unable "to form effective political coalitions to block management's political mobilization" against market discipline. See MACEY, supra note 163, at 235.
212. See Robert C Illig, The Promise of Hedge Fund Governance: How Incentive Compensation Can Enhance Institutional Investor Monitoring, 60 ALA. L. REV. 41, 83 (2008);
213. Randall S. Thomas, The Evolving Role of Institutional Investors in Corporate Governance and Corporate Litigation, 61 VAND. L. REV. 299, 302-03 (2008).
214. Among the three, commentators have lauded hedge funds as offering the best opportunities for reducing agency costs. See Robert C. Illig, What Hedge Funds Can Teach Corporate America: A Roadmap for Achieving Institutional Investor Oversight, 57 AM. U. L. REV. 225, 228-29 (2007);
215. Marcel Kahan & Edward B. Rock, Hedge Funds in Corporate Governance and Corporate Control, 155 U. PA. L. REV. 1021, 1042-43 (2007).
216. Rose, supra note 168, at 1359 ("[Although shareholder power may result in reduced agency costs due to management empire-building, other agency costs are created that may reduce the effectiveness of or even outweigh the gains from shareholder power."); see also Iman Anabtawi & Lynn Stout, Fiduciary Duties for Activist Shareholders, 60 STAN. L. REV. 1255, 1293 (2008).
217. Rule 14a-8 requires management to include on the corporate proxy advisory shareholder proposals of 500 words or fewer, provided the proposals meet certain criteria laid out by the rule. See 17 C.F.R. §240.14a-8 (2011). "[Such proposals] have had a powerful admonitory effect on corporate boards, with corporate boards often voluntarily assenting to non-binding proposals rather than risking wrath at the next director election." Leo E. Strine, Jr., Breaking the Corporate Governance Logjam in Washington: Some Constructive Thoughts on a Responsible Path Forward, 63 Bus. LAW. 1079, 1095-96 (2008).
218. See Marcel Kahan & Edward Rock, Embattled CEOs, 88 TEX. L. REV. 987, 1044-45 (2010). Shareholders still are not permitted to vote on most matters affecting the company.
219. See STEPHEN M. BAINBRIDGE, THE NEW CORPORATE GOVERNANCE IN THEORY AND PRACTICE 34-35 & n.25 (2008) ("In all states, the corporation code provides for a system of nearly absolute delegation of power to the board of directors.").
220. TOM BAKER & SEAN J. GRIFFITH, ENSURING CORPORATE MISCONDUCT: How LIABILITY INSURANCE UNDERMINES SHAREHOLDER LITIGATION 1 (2010) ("Because public regulators cannot oversee every company at every moment and cannot anticipate or even respond to every report of a potential wrong⋯ [shareholder] lawsuits⋯ fill an important gap in the regulatory framework affecting American business.").
221. See Renee M. Jones, Law, Norms, and the Breakdown of the Board: Promoting Accountability in Corporate Governance, 92 IOWA L. REV. 105, 108 (2006) ("A combination of substantive doctrines and procedural requirements embodied in corporate law has made it nearly impossible for shareholders to prevail when challenging the decisions and practices of corporate management.").
222. See, e.g., Amanda M. Rose, Reforming Securities Litigation Reform: Restructuring the Relationship Between Public and Private Enforcement of Rule 10b-5, 108 COLUM. L. REV. 1301, 1305-07 (2008) (arguing for granting the SEC power to "prescreen" shareholder lawsuits before they can be filed).
223. See ARTHUR R. PINTO & DOUGLAS M. BRANSON, UNDERSTANDING CORPORATE LAW § 14.03 (3d ed. 2009).
224. For an extensive account of how multiple litigations are directed at the same firms, see Jessica Erickson, Overlitigating Corporate Fraud: An Empirical Examination, 97 IOWA L. REV. 49 (2011).
225. From the economist's perspective, public regulation "aims to induce outcomes which would not be reached by free market activity. It is therefore designed to overcome some perceived instance of market failure." Anthony Ogus, Criminal Law and Regulation, in 3 ENCYCLOPEDIA OF LAW AND ECONOMICS: CRIMINAL LAW AND ECONOMICS, supra note 39, at 90.
226. George W. Dent, Jr., For Optional Federal Incorporation, 35 J. CORP. L. 499, 509(2010) ("[T]he SEC's jurisdiction is limited to matters like disclosure and proxy solicitations; it does not extend to corporate governance in general.").
227. See generally Roberta Karmel, Realizing the Dream of William O. Douglas - The Securities and Exchange Commission Takes Charge of Corporate Governance, 30 DEL. J. CORP. L. 79 (2005).
228. For an in-depth analysis of the difference between structural regulation and sanction-based systems, see Edward K. Cheng, Structural Laws and the Puzzle of Regulating Behavior, 100 Nw. U. L. REV. 655 (2006). For more on the difference between rules (which are defined in detail ex ante) and standards (which attain definition ex post),
229. see Louis Kaplow, Rules Versus Standards: An Economic Analysis, 42 DUKE L.J. 557, 565 (1992). For an analysis of how rules and standards (or principles) affect securities enforcement and securities rule-making,
230. see Cristie L. Ford, New Governance, Compliance, and Principles-Based Securities Regulation, 45 AM. BUS. L.J. 1 (2008),
231. and James Park, The Competing Paradigms of Securities Regulation, 57 DUKE L.J. 625 (2007).
232. Arguably, the "honest services" provision of the federal fraud statutes had been interpreted so broadly as to criminalize mere violations of fiduciary duties. See 18 U.S.C. § 1346 (2006) ("[T]he term 'scheme or artifice to defraud' includes a scheme or artifice to deprive another of the intangible right of honest services."). The Supreme Court's recent decision in Skilling v. United States appears to have cut off this expansion, at least for now. See 130 S. Ct. 2896, 2930-31 (2010) (holding that the "honest services" statute could pass muster under constitutional vagueness doctrines if restricted to "offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes"). For previous criticism of the broad reading of the honest services statute, see Lisa L. Casey, Twenty-Eight Words: Enforcing Corporate Fiduciary Duties Through Criminal Prosecution of Honest Services Fraud, 35 DEL. J. CORP. L. 1, 8 (2010).
233. The Manhattan District Attorney successfully prosecuted Dennis Kozlowski, the former CEO of Tyco, for committing and conspiring to commit grand larceny. See Andrew Ross Sorkin & Roben Farzad, At Tyco Trial No. 2, Similarities to No. 1, N.Y. TIMES, June 20,2005, at C1.
234. See, e.g., 18 U.S.C. § 1001 (false statements); Id. § 1350 (officer certification requirement); Id. § 1520 (destruction of corporate audit records). On the criminal aspects of Sarbanes-Oxley and officer certification, see Stephen J. Choi, A Framework for the Regulation of Securities Market Intermediaries, 1 BERKELEY Bus. L.J. 45, 61-62 (2004).
235. Mary Jo White, Corporate Criminal Liability: What Has Gone Wrong?, 1517 PLI/CORP. 815, 817 (2005).
236. See Samuel W. Buell, The Blaming Function of Entity Criminal Liability, 81 IND. L.J. 473, 477 (2006) (identifying the "popular impulse to condemn entities criminally for the harms they visit upon people" as the driving force behind federal prosecutions of corporate entities).
237. See Gary P. Naftalis, Defending Parallel Civil and Criminal Proceedings, SM090 A.L.I.-A.B.A. 1257, 1314 (2007)
238. (citing Paul Beckett, SEC May Seek Civil Fines in Some Cases Involving Parallel Criminal Proceedings, WALL ST. J., Jan 8,1998, at B6).
239. A number of scholars have already begun to investigate this question. See, e.g., John C. Coffee, Jr. & Hilary A. Sale, Redesigning the SEC: Does the Treasury Have a Better Idea?, 95 VA. L. REV. 701, 731 (2009);
240. Jill E. Fisch, Top Cop or Regulatory Flop? The SEC at 75, 95 VA. L. REV. 785, 803-04 (2009) (arguing that SEC failed to show adequate leadership in the wake of the 2008 financial crisis).
241. See Peter J. Henning, Should the SEC Spin off the Enforcement Division?, 11 TRANSACTIONS: TENN. J. Bus. L. 121,125-26 & n.20 (2009).
242. David Scheer & Jesse Westbrook, SEC Names Ex-Prosecutor Khuzami to Head Enforcement (Update 1), BLOOMBERG NEWS (February 19, 2009, 15:17 EST), http://www.bloomberg.com/apps/news?pid=newsarchive&sid=azMOC7v8-Ies.
243. Dan M. Kahan, Social Meaning and the Economic Analysis of Crime, 27 J. LEGAL STUD. 609, 616(1998). (Pubitemid 128429246)
244. see also Neal Devins & Michael Herz, The Uneasy Case for Department of Justice Control of Federal Litigation, 5 U. PA. J. CONST. L. 558, 561 (2003). One SEC Commissioner, Luis Aguilar, has argued for the Enforcement Division's own criminal prosecution authority.
245. See Luis A. Aguilar, SEC Comm'r, Speech Before the North American Securities Administrators Association's Winter Enforcement Conference: Empowering the Markets [sic] Watchdog to Effect Real Results (Jan. 10, 2009), available at http://www.sec.gov/news/speech/2009/spch0110091aa.htm.
246. See Douglas Branson, Trekking Toward liber Regulation: Prospects for Meaningful Change at SEC Enforcement?, 71 U. PITT. L. REV. 545, 561-64 (2010) (cataloguing a number of securities and corporate governance scandals whose investigations were spearheaded by SAGs and not the SEC);
247. Timothy Meyer, Federalism and Accountability: State Attorneys General, Regulatory Litigation, and the New Federalism, 95 CALIF. L. REV. 885, 886 (2007) (describing how SAGs have "used litigation to become a regulatory force at the national level").
248. The Martin Act provides both civil and criminal penalties for, inter alia, fraud, deception, omission, false pretenses, or false statements used to induce or promote the purchase or sale of securities within or from the state of New York. N.Y. GEN. BUS. LAW § 352-c (McKinney 1996). For an analysis of the ways in which the Martin Act exceeds the scope of the federal securities laws (and therefore favors the New York Attorney General with greater leverage), see Kulbir Walha & Edward Filusch, Current Developments, Eliot Spitzer: A Crusader Against Corporate Malfeasance or a Politically Ambitious Spotlight Hound? A Case Study of Eliot Spitzer and Marsh & McLennan, 18 GEO. J. LEGAL ETHICS 1111, 1116(2005).
249. For a discussion of the New York Attorney General's securities enforcement record under Eliot Spitzer's leadership, see Jonathan R. Macey, Positive Political Theory and Federal Usurpation of the Regulation of Corporate Governance: The Coming Preemption of the Martin Act, 80 NOTRE DAME L. REV. 951, 952 (2005).
250. For a survey of state offices and their stance toward securities fraud and similar violations, see Lori Martin, David Zetlin-Jones & Kimberly Chehardy, The Investment Management Institute: Enforcement Trends and Themes, 1802 PLl/CORP 333, 341-42 (2010).
251. See Rachel E. Barkow, The Prosecutor as Regulatory Agency, in PROSECUTORS IN THE BOARDROOM, supra note 19, at 182-85.
252. See, e.g., Statement of Attorney General Andrew Cuomo Relating to Bank of America and Merrill Lynch, Office of the Attorney General, Media Center (Aug. 3, 2009), available at http://www.ag.ny.gov/media-center/2009/aug/aug3a-09.html (describing the timing and disclosure of Bank of America's and Merrill Lynch's 2009 bonuses as a "surprising fit of corporate irresponsibility").
253. Daniel Richman has observed that Congress can more easily influence enforcement policy through funding (for better or worse) when the relevant agency is responsible for a small portfolio of issues. Daniel Richman, Federal Criminal Law, Congressional Delegation, and Enforcement Discretion, 46 UCLA L. REV. 757, 793-99 (1999).
254. For a recent analysis of the political power of state attorneys general, see Margaret Lemos, State Enforcement of Federal Law, 86 N.Y.U. L. REV. 698, 702 (2011) ("[A]ttorneys general in most states are independent from the state legislature and governor, representing different constituencies.").
255. I do not mean to ignore corporate punishers' outputs, because their settlements often do include structural reforms that prosecutors and regulators justify in utilitarian terms such as deterring wrongdoing and improving capital markets. See Brandon Garrett, Structural Reform Prosecutions, 93 VA. L. REV. 853, 863-64 (2007). Nevertheless, corporate punishers draw power not from their reformatory goals but rather from their embrace of the public's retributive motivations.
256. See, e.g., Stuart Green, Moral Ambiguity in White Collar Criminal Law, 18 NOTRE DAME J.L. ETHICS & PUB. POL'Y 501, 514-16 (2004); Cf Braithwaite, supra note 4, at 14 (arguing that "[j]ust deserts thinking⋯ had almost no impact on business regulation" in the 1970s among punishment theorists).
257. See, e.g., Maurice Stucke, Morality and Antitrust, 2006 COLUM. Bus. L. REV. 443, 500-01 (discussing studies documenting change in attitudes toward white collar crime and antitrust offenses).
258. Donald Langevoort observes that the government did the same with Ivan Boesky and others in the wake of the junk bond and savings and loan crisis. See Donald Langevoort, The SEC as a Lawmaker: Choices About Investor Protection in the Face of Uncertainty, 84 WASH. U. L. REV. 1591, 1620 (2006).
259. See James Fanto, Paternalistic Regulation of Public Company Management: Lessons from Bank Regulation, 58 FLA. L. REV. 859, 860-61 (2006) ("[The] regulation of public firm management, as it has occurred, is too oriented towards the punishment of directors and officers.").
260. See Frank O. Bowman, III, Sentencing High-Loss Corporate Insider Frauds After Booker, 20 FED. SENT'G REP. 167, 167 (2008).
261. See Francis Cullen, Jennifer Hartman & Cheryl Lero Jonson, Bad Guys: Why the Public Supports Punishing White-Collar Offenders, 51 CRIM. L. SOC. CHANGE 31, 33 (2008).
262. Madoff Sentence Cheered, Seen as "Strong" Message, CNBC (June 29, 2009), http://www.cnbc.eom/id/31610169/Madoff-Sentence-Cheered-Seen-as- Strong-Message.
263. See, e.g., Langevoort, supra note 135, at 902. Professor Ribstein attributes some of this outrage to the ways in which corporate business is portrayed in popular culture. See Larry Ribstein, How Movies Created the Financial Crisis, 2009 MICH. ST. L. REV. 1171, 1175-77;
264. Larry Ribstein, Imagining Wall Street, 1 VA. L. & Bus. REV. 165, 166 (2006).
265. Donald Langevoort, Internal Controls After Sarbanes-Oxley: Revisiting Corporate Law's "Duty of Care as Responsibility for Systems," 31 J. CORP. L. 949, 965 (2006) (commenting that the public increasingly has sought greater transparency and oversight of institutions "that have significant political, economic, or social power, whether public or private").
266. Christine Hurt, Of Breaches of the Peace, Home Invasions, and Securities Fraud, 44 AM. CRIM. L. REV. 1365, 1368 (2007) ("These new penalties reflect our society's fears for our retirement castles and peaceful capital marketplaces.").
267. See, e.g., Joan MacLeod Heminway, Hell Hath No Fury like an Investor Scorned: Retribution, Deterrence, Restoration, and the Criminalization of Securities Fraud Under Rule I0b-5,2 J. Bus. & TECH. L. 3, 7 (2007).
268. See, e.g., Brandon Garrett, Collaborative Organizational Prosecution, in PROSECUTORS IN THE BOARDROOM, supra note 19, at 165-67.
269. Charles Sabel and William Simon have been some of the strongest proponents of "experimentalist" regulation. See Sabel & Simon, supra note 112, at 56. Separately, Simon has criticized the potential for adversarial systems to drive out more experimental governance approaches. See William Simon, Solving Problems vs. Claiming Rights: The Pragmatist Challenge to Legal Liberalism, 46 WM. & MARY L. REV. 127, 168-69 (2004).
270. See generally Becker, supra note 35; Polinsky & Shavell, supra note 39. On bounded rationality, see Christine Jolls, Cass R. Sunstein & Richard H. Thalery, A Behavioral Approach to Law and Economics, in BEHAVIORAL ECONOMICS 13, 14-15 (Cass R. Sunstein ed., 2000).
271. For law and economics scholars, this is the sole justification for punitive fines, imprisonment, and other government sanctions. See, e.g., A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An Economic Analysis, 111 HARV. L. REV. 869, 882 (1998).
272. Consider the evocative title of Donald Langevoort's article on how the SEC should use equitable remedies to punish officers who engage in corporate fraud: Donald Langevoort, On Leaving Corporate Executives "Naked, Homeless and Without Wheels": Corporate Fraud, Equitable Remedies, and the Debate over Entity Versus Individual Liability, 42 WAKE FOREST L. REV. 627 (2007). Langevoort was quoting SEC Chairman Richard Breeden. See id. at 627.
273. For arguments that shareholder litigation could perform this normative task, see Rock, supra note 158, at 1089, and James Cox, The Social Meaning of Shareholder Suits, 65 BROOK. L. REV. 3, 5 (1999). Whatever the strength of these claims, it seems unassailable that the stronger normative "bite" resides with the public institutions that impose punishment.
274. See, e.g., Daniel Nagin, Criminal Deterrence at the Outset of the Twenty-First Century, 23 CRIME & JUST. 1, 6-8 (1998).
275. On the subject of altruistic punishment, see Fehr & Gachter, supra note 62, at 137 (detecting instances in which individuals punish others, even at cost to themselves); see also Dhammika Dharmapala, Nuno Garoupa & Richard McAdams, Punitive Police? Agency Costs, Law Enforcement and Criminal Procedure (Mar. 2011) (unpublished manuscript) (on file with author) (discussing altruistic punishment literature).
276. Norms can be either internally held beliefs or reputational constraints imposed by others. See Robert Cooter, Do Good Laws Make Good Citizens? An Economic Analysis of Internalized Norms, 86 VA. L. REV. 1577, 1582-84 (2000) (explaining the difference between "intrinsic" norms and "instrumental norms" that confer an "advantage gained from having the reputation of being a good citizen");
277. Richard McAdams, The Origin, Development, and Regulation of Norms, 96 MICH. L. REV. 338, 376 (1997).
278. For drawbacks of creating a heightened corporate police presence, see Miriam Hechler Baer, Corporate Policing and Corporate Governance: What Can We Learn from Hewlett-Packard's Pretexting Scandal?, 11 U. ClN. L. REV. 523, 580-81 (2008).
279. See James Fanto, A Social Defense of Sarbanes-Oxley, 52 N.Y.L. SCH. L. REV. 517, 518-19 (2007) (defending Sarbanes-Oxley as a means of communicating social norms). Like many statutes, Sarbanes-Oxley represented a mix of both punishment and regulation. Hurt, supra note 19, at 373-75.
280. Donald Braman, Punishment and Accountability: Understanding and Reforming Criminal Sanctions in America, 53 UCLA L. REV. 1143, 1162 (2006) ("[A]dherence to norms of responsible behavior depends in part on the perception that others are also adhering to those norms.").
281. See Daniel Richman & William Stuntz, Al Capone's Revenge: An Essay on the Political Economy of Pretextual Prosecutions, 105 COLUM. L. REV. 583, 610 (2005);
282. William J. Stuntz, The Pathological Politics of Criminal Law, 100 MICH. L. REV. 505, 531 (2001).
283. See, e.g., Daniel Richman, Federal Sentencing in 2007: The Supreme Court Holds -The Center Doesn't, 117 YALE L.J. 1374, 1383 (2008) (criticizing the Bush Administration's Corporate Fraud Task Force as little more than a "branding device" to take credit for prosecutions that local United States Attorneys were investigating and prosecuting).
284. For example, we may punish actors in ways that undermine deterrence, such as occurs when punishers fail to accord adequate credit to organizations that monitor, identify, and self-report wrongdoing to authorities. See Jennifer Arlen, Corporate Criminal Liability: Theory and Evidence, in RESEARCH HANDBOOK ON CRIMINAL LAW (Keith Hylton & Alon Harel, eds.) (forthcoming) (criticizing the federal Organizational Sentencing Guidelines as providing inadequate incentives for monitoring and reporting).
285. See A. Mitchell Polinsky & Steven Shavell, Public Enforcement of Law, in 3 ENCYCLOPEDIA OF LAW AND ECONOMICS: CRIMINAL LAW AND ECONOMICS, supra note 39, at 34-36.
286. E.g., Aya Gruber, A Distributive Theory of Criminal Law, 52 WM. & MARY L. REV. 1, 32-33 (2010).
287. Alice Ristroph, Desert, Democracy, and Sentencing Reform, 96 J. CRIM. L. & CRIMINOLOGY 1293, 1295 (2006).
288. Thomas W. Joo, Legislation and Legitimation: Congress and Insider Trading in the 1980s, 82 IND. L.J. 575, 577 (2007) (arguing that 1980s insider trading legislation represented Congress's attempt to establish legitimacy and power as an institution "while distancing Washington from Wall Street"). Donald Langevoort's commentary on Sarbanes-Oxley is similar: "The regulatory reaction to Enron, for example, might have been far less about securities regulation per se than public anger that associated the well-publicized social and economic losses to accounts of arrogance and greed." Langevoort, supra note 232, at 1612.
289. Similar narratives pervade the discussion of insider trading prosecutions: When [insider trading prosecutions] involve the rich and famous like Ivan Boesky and Michael Millken, they tap into images of power, greed, and hubris⋯. Like any good mythological story, these proceedings trigger richly complex public feelings about fortune and responsibility, and allow the government to appear as deus ex machina to pronounce the just desserts. Donald Langevoort, Rereading Cady, Roberts: The Ideology and Practice of Insider Trading, 99 COLUM. L. REV. 1319, 1329-30 (1999).
290. See, e.g., Joe Nocera, Short Memories at Goldman, N.Y. TIMES, Oct. 24, 2009, at B1.
291. Peter Edmonston, Thain Says He'll Repay Remodeling Costs, N.Y. TIMES, Jan. 27, 2009, at B5.
292. Michael J. de la Merced, Cuomo Seeks A.I.G. Bonus Information, N.Y. TIMES, Mar. 16, 2009, http://dealbook.blogs.nytimes.eom/2009/03/16/cuomo-seeks- aig-bonus-information;
293. see also Louise Story, Cuomo Wins Ruling to Name Merrill Bonus Recipients, N.Y. TIMES, Mar. 19, 2009, http://www.nytimes.com/2009/03/ 19business/19cuomo.html ("[Cuomo] also vowed to identify publicly the employees who had received bonuses at the American International Group.").
294. See, e.g., Robert Frank, Income Inequality: Too Big to Ignore, N.Y. TIMES, Oct. 17, 2010, at BU5. (arguing that economists should join moral philosophers in worrying about income inequality in the United States).
295. See Stephenson, supra note 102, at 1423-24 & n.2. For specific applications in the corporate governance context, see Jennifer Aden, Removing Prosecutors from the Boardroom: Limiting Prosecutorial Discretion to Impose Structural Reforms, in PROSECUTORS IN THE BOARDROOM, supra note 19, at 62-63 ("Prosecutors rarely have sufficient experience working in any business, much less adequate industry-specific expertise, to make these decisions reliably.").
296. According to cognitive psychologists, jurors do not weigh evidence individually but rather construct "story models" that are most consistent with the evidence presented to them. See Nancy Pennington & Reid Hastie, A Cognitive Theory of Decision Making: The Story Model, 13 CARDOZO L. REV. 519, 519 (1991). "[Pjeople create coherent representations from the evidence in the form of explanations, and these representations, rather than the raw evidence, determine [the jurors'] decisions."
297. Michael P. Weinstock & Robin A. Flaton, Evidence Coverage and Argument Styles: Cognitive Factors in a Juror's Verdict Choice, 17 J. BEHAV. DECISION MAKING 191, 192 (2004);
298. see also REID HASTIE, STEVEN D. PENROD & NANCY PENNINGTON, INSIDE THE JURY 23 (1983).
299. When repeat players are present, however, polarization may decrease. See, e.g., Stephanos Bibas, Transparency and Participation in Criminal Procedure, 81 N.Y.U. L. REV. 911, 912 (2006) (examining the "gulf between "insiders" and "outsiders" within the criminal justice system and not between prosecution and defense).
300. To that end, punishers may not be very different from their corporate-officer prey. See Donald C. Langevoort, Resetting the Corporate Thermostat: Lessons from the Recent Financial Scandals About Self-Deception, Deceiving Others and the Design of Internal Controls, 93 GEO. L.J. 285, 288 (2004) (discussing characteristics - aggression, desire to win - of successful corporate executives and how such characteristics affect efforts to combat fraud). Recall, confrontation is itself a benefit insofar as it insulates against capture.
301. In contrast, consider James McConvill's positive approach to spurring governance reform. See James A. McConvill, Positive Corporate Governance, 6 J. Bus. & SEC. L. 51, 53 (2006).
302. Tom Tyler, Legitimacy and Criminal Justice: The Benefits of Self-Regulation, 1 OH. ST. J. CRIM. L. 307, 310 (2009) ("[Bjecause people associate law and legal authorities with punishment, the instrumental relationship between the public and the legal system is antagonistic. People become more likely to resist and avoid legal authorities and less likely to cooperate with them.");
303. see also TOM TYLER, WHY PEOPLE OBEY THE LAW 26 (2006).
304. Miriam Hechler Baer, Governing Corporate Compliance, 50 B.C. L. REV. 949, 985-90 (2009).
305. Traditional approaches include command-and-control rules, as well as more market-or incentive-based regulatory systems. See Jon D. Hanson & Kyle D. Logue, The Costs of Cigarettes: The Economic Case for Ex Post Incentive-Based Regulation, 107 YALE L.J. 1163, 1173-74 (1998) (delineating three regulatory approaches, including command and control, outcome-based standards, and incentive-based systems).
306. New Governance theory encompasses a number of approaches, whereby "[t]he primary goal⋯ is to set into motion and then sustain a style of governance that promotes continuous learning and improvement in a middle ground between top-down command-and-control methods of traditional regulation and the undisciplined free-for-all of deregulation." Katherine Kruse, Instituting Innocence Reform: Wisconsin's New Governance Experiment, 2006 WIS. L. REV. 645, 676-77.
307. Stuart Banner, What Causes New Securities Regulation? 300 Years of Evidence, 75 WASH. U. L.Q. 849, 850 (1997);
308. Erik F. Gerding, The Next Epidemic: Bubbles and the Growth and Decay of Securities Regulation, 38 CONN. L. REV. 393, 396 (2006) (describing the "perverse pattern" of deregulation followed by investor bubbles, followed by busts, followed by re-regulation);
309. Robert Prentice, The Inevitability of a Strong SEC, 91 CORNELL L. REV. 775, 776 (2006).
310. In addition to the sources cited in note 297, supra, compare Roberta Romano, Regulating in the Dark 2-3 (December 18, 2011) (unpublished manuscript), available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=1974148&
311. John C. Coffee, Jr., The Political Economy of Dodd-Frank: Why Financial Reform Tends to Be Frustrated and Systemic Risk Perpetuated, 97 CORNELL L. REV. (forthcoming 2012).
312. See, e.g., David Hess & Cristie Ford, Corporate Corruption and Reform Undertakings: A New Approach to an Old Problem, 41 CORNELL INT'L L.J. 307, 310 (2008).
313. Michael C. Dorf & Charles Sabel, A Constitution of Democratic Experimentalism, 98 COLUM. L. REV. 267, 270 (1998);
314. Jody Freeman & Daniel Farber, Modular Environmental Regulation, 54 DUKE L.J. 795, 860 (2005);
315. Bradley C Karkkainen, Information as Environmental Regulation: TRI and Performance Benchmarking, Precursor to a New Paradigm?, 89 GEO. L.J. 257, 260 (2001); (Pubitemid 33651521)
316. Orly Lobel, The Renew Deal: The Fall of Regulation and the Rise of Governance in Contemporary Legal Thought, 89 MINN. L. REV. 342, 343-14 (2004);
317. Lester M. Salamon, The New Governance and the Tools of Public Action: An Introduction, 28 FORDHAM URB. L.J. 1611, 1623 (2001);
318. Jason Solomon, Law and Governance in the 21st Century Regulatory State, 86 TEX. L. REV. 819, 820 (2008)
319. (reviewing LAW AND NEW GOVERNANCE IN THE EU AND THE US (Grainne de Biirca & Joanne Scott eds., 2006)).
320. Kenneth Bamberger & Dierdre Mulligan, Privacy on the Books and on the Ground, 63 STAN. L. REV. 247, 308-09 (2011);
321. Cameron Holley & Neil Gunningham, Natural Resources, New Governance and Legal Regulation: When Does Collaboration Work?, 24 NEW ZEALAND L. REV. 309, 316-30 (2011) (examining the limited successes of two New Governance regimes in New Zealand through a case study).
322. See, e.g., Amy J. Cohen, Governance Legalism: Hayek and Sabel on Reason
323. Kimberly Krawiec, Cosmetic Compliance and the Failure of Negotiated Governance, 81 WASH. U. L.Q. 487, 491 (2003).