Democratic Massachusetts Sen. Elizabeth Warren's proposal to jail executives for a company’s wrongdoing is a break from legal tradition and creates a damaging corporate culture, according to U.S. Chamber of Commerce senior vice president John Wood.
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“Corporate executives would be more concerned about protecting themselves from legal liability than they would be about growing their companies, creating jobs and helping our economy grow,” he said on FOX Business’ “Making Money with Charles Payne” Tuesday.
Warren's Corporate Executive Accountability Act would make it a federal crime for corporate executives to negligently allow violations of the law at their company.
Wood said that negligence is a legal standard “far below intentional misconduct” when “a reasonable person in the shoes of this person, in this case a corporate executive, would have exercised more care.”
In a Wall Street Journal op-ed, Wood accused the 2020 presidential candidate of allowing her political aspirations get in the way of her legal instincts.
“Elizabeth Warren was one of my best law-school professors, but her political ambitions seem to have suppressed her once-reasonable instincts, particularly regarding corporate regulation.”
While Wood agrees with Warren that it is “very difficult to prosecute corporate executives and show that they knowingly engaged in wrongdoing,” he says that the legal standard should not be lowered.
“We shouldn’t lower the standard to negligence, which does not require intent, simply because it is difficult to prove intent.”
Wood adds that he is all for prosecuting executives who commit any wrongdoing, but U.S. law holds criminal accountability to anyone who knowingly participated in any transgression.
“A person does not deserve to lose his liberty and be branded a criminal,” he writes. “Even if the sentence is short, criminal convictions carry significant moral and social stigma. That reputational damage is often impossible to repair.”