More and more, individual corporate officers and directors are threatened with potentially life-altering consequences when they are caught up in government civil fraud investigations. Reaching agreement to settle these matters without admitting liability—as had been the standard practice followed by many individuals in the past—is now under fire. Preet Bharara, the U.S. Attorney for the Southern District of New York, has been forthright about this change, explaining: “When we’re talking about vindicating interests related to fraud, companies and individuals whenever possible should have to admit that they engaged in bad conduct for all the world to see.”1
Where CEOs, CFOs, and other executives frequently find themselves as named defendants in federal civil enforcement actions, requiring admissions of wrongdoing in settlement may have broad-reaching consequences, very much akin to a finding of liability after trial in any civil fraud action. This article explores the personal financial and professional consequences inherent in such a finding of individual liability.
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