CARROTS AND STICKS: PLACING REWARDS AS WELL AS PUNISHMENT IN REGULATORY AND TORT LAW

Companies that pay bribes, defraud the government or injure private citizens with malice are subject to some of the highest penalties in the American legal system. Penalties for the first two are governed by high civil and criminal fines under the Foreign Corrupt Practices Act (FCPA) and the federal False Claims Act (FCA), respectively. Injuring with malice can give rise to unlimited punitive damages under state and federal law. These 'sticks' provide harsh penalties to stop and deter companies from such actions. The article explains that such carrots must be offered to optimize corporate compliance; reduce corruption, fraud and injury; and restore needed fairness to these enforcement actions. The article concludes that coupling these 'carrots' and the law's existing 'sticks' is the best way to incentivize the right corporate behaviors and avoid trespassing on the fundamental principle of 'American Fairness' that American jurisprudence seeks to achieve. Adapted from the source document.