Justice Department sets its sights on corporate executives

WASHINGTON — Stung by years of criticism that it has coddled Wall Street criminals, the Justice Department issued new policies Wednesday that prioritize the prosecution of individual employees — not just their companies — and put pressure on corporations to turn over evidence against their executives.

The new rules, issued in a memo to federal prosecutors nationwide, represent the first major policy announcement by Attorney General Loretta Lynch since she took office in April. The memo is a tacit acknowledgment of criticism that, despite securing record fines from major corporations, the Justice Department under President Obama has punished few executives involved in the housing crisis, the financial meltdown, and corporate scandals.

“Corporations can only commit crimes through flesh-and-blood people,” Sally Q. Yates, the deputy attorney general and the author of the memo, said in an interview Wednesday. “It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.”

Though limited in reach, the memo could erase some barriers to prosecuting corporate employees and inject new life into these high-profile investigations. The Justice Department often targets companies themselves and turns its eyes toward individuals only after negotiating a corporate settlement. In many cases, that means the offending employees go unpunished.

The memo tells civil and criminal investigators to focus on individual employees from the beginning. In settlement negotiations, companies will not be able to obtain credit for cooperating with the government unless they identify employees and turn over evidence against them, “regardless of their position, status, or seniority.” Credit for cooperation can save companies billions of dollars in fines and mean the difference between a civil settlement and a criminal charge.

Under Attorney General Eric H. Holder Jr., the Justice Department faced repeated criticism from Congress and consumer advocates that it treated corporate executives leniently. After the 2008 financial crisis, no top Wall Street executives went to prison, highlighting a disparity in how prosecutors treat corporate leaders and typical criminals. Although prosecutors did collect billions of dollars in fines from big banks, critics dismissed those as hollow victories.

Justice Department officials have defended their record fighting corporate crime, saying that it can be nearly impossible to charge top executives who insulate themselves from direct involvement in wrongdoing.