November 19, 2024

Bill Hwang, the Former Archegos Founder, Owner, and Historic Stock Manipulator Should Be Sentenced to Over 20 Years in Prison

To: Interested Parties

From: Stephen Hall, Legal Director and Securities Specialist (Media Contact: Anton Becker, Dir. of Communications, [email protected])

Date: November 19, 2024

Re: Sentencing of Bill Hwang, Former Hedge Fund Trader at Disgraced Archegos Capital Management, for His Historic Criminal Stock Manipulation and Fraud Scheme

Introduction. Sung Kook “Bill” Hwang (“Hwang”) was the founder, owner, and head of Archegos Capital Management (“Archegos”), a “family office” hedge fund that managed the wealth of Hwang, his family, and employees. After a two-month jury trial this summer that featured over twenty witnesses for the government, including two former Archegos employees who pled guilty to their own crimes and testified against Hwang, he was convicted of ten counts of securities fraud, wire fraud, racketeering conspiracy, and market manipulation. As the government wrote in its sentencing memorandum, Hwang is as “an unrepentant recidivist, [who] led one of the largest securities fraud schemes in history and caused billions in losses.” (Emphasis added).

Tomorrow at 10:00 a.m., Hwang is scheduled to be sentenced for his crimes. The government has recommended that the court impose a term of twenty-one years of imprisonment, order him to forfeit his criminal proceeds, and direct him to pay restitution to his victims. The government deserves credit for the successful prosecution of a complex and large-scale fraud. Furthermore, its sentencing recommendation goes a long way toward achieving justice, effecting punishment, and promoting deterrence, both general and specific. As the government explains in its sentencing memorandum (“GSM”), a prison term of 21 years is appropriate, given the gravity of Hwang’s wrongdoing, his recidivism, his refusal to accept responsibility for his actions, the tremendous financial losses he caused, and the damage to the markets themselves. It is in line with other sentences handed down to white collar criminals and, at 60 years old, Hwang will spend the bulk, if not all, of his remaining years in prison. The forfeiture and restitution recommendations are also clearly necessary and appropriate.

The sentence should go further, however, most importantly with respect to the restitution order. It should benefit everyday investors who suffered at the hands of Hwang, not just the employees of Archegos and the globally systemic important banks that were Archegos’s counterparties. Indeed, it is fair to question the extent to which the banks deserve restitution. The banks actually facilitated the fraud as they lined their own pockets from their transactions with Hwang. Perhaps they did so unwittingly, although the record raises questions even on that point, citing to compliance lapses. Or perhaps they were willfully blind as they hoped and stood to gain from their dealings with Hwang. But in any event, they stand in a different position than the countless investors who played no part in the fraud and simply relied on the integrity of the markets as they traded. And as a general proposition, the banks are in a far better position to absorb the losses than the individual investors who suffered from the scheme. Finally, the sentence meted out to Hwang should include a substantial fine, something the GSM does not address. While the government’s proposed forfeiture and restitution orders would saddle Hwang with billions of dollars in monetary obligations, it is nevertheless important to send the message to white collar criminals that such large-scale and damaging frauds will be met with all possible sanctions.

Overview. Hwang orchestrated a massive market manipulation, the unraveling of which caused billions of dollars in losses and “victimized a wide swath of market participants, including banks and prime brokers that engaged in loans and securities trading with Archegos based on lies and concealment; ordinary investors who purchased and sold the relevant securities at artificial prices; securities issuers who made business decisions based on the artificial prices of their stocks” and, finally, his own employees who were forced to invest with Archegos large portions of their pay as deferred compensation only to see that value evaporate. According to the government’s calculations, over $33 million of mandatory deferrals were lost (excluding the deferrals of fellow conspirators).

The ultimate collapse of Archegos also highlighted major regulatory vulnerabilities in our financial system. Hwang ran Archegos as a private hedge fund, or “family office.” As such, it was not required to disclose to regulators information about its holdings and debt, unlike other large hedge funds subject to greater oversight. Those disclosures could have exposed Hwang’s fraudulent scheme and allowed the crisis to be averted before so many were injured. The Archegos incident also exposed other gaps in the regulations that govern our securities markets, including the risks arising from highly leveraged trading strategies. It also highlighted the potential systemic risks posed by the interconnectedness of the financial system, as the losses at Archegos had ripple effects on the stock prices of the companies involved and raised concerns about the stability of the banking system. Overall, the Archegos debacle serves as a cautionary tale not only about greed and illegality but also about the dangers of excessive leverage and the need for greater oversight of opaque investment vehicles like the Archegos family office and the derivatives it used as a tool for manipulation.

The scandal shows that the fraud and recklessness of a single firm can jeopardize the stability of our financial markets and the livelihoods of millions of Americans. As we have repeatedly stated for years, it is essential that behavior such as the crime spree orchestrated by Bill Hwang be severely punished, both to hold wrongdoers accountable and to deter other potential wrongdoers from engaging in similar illegal conduct. Hwang’s sentencing will serve as another test of whether, and to what extent, wealthy financiers can be held accountable in our criminal justice system.

Background. This conviction is not Hwang’s first encounter with law enforcement; as the government says, he is a recidivist. According to the government, “[i]n 2008 and 2009, Hwang worked with his trading team to manipulate stocks to benefit his portfolio” then called Tiger Asia Management. In 2012, Tiger Asia Management and Hwang admitted to illegally using inside information to trade Chinese banks’ stocks, and agreed to criminal and civil settlements totaling more than $60 million. Tiger Asia Management, Hwang, and others also paid $44 million in penalties to the Securities and Exchange Commission. In 2014, Hwang was banned from trading in Hong Kong for a period of four years. But none of that seems to have mattered to Hwang, who would proceed to engage in fraud on an even larger scale. Hwang rebranded Tiger Asia Management as “Archegos” and set about perpetrating an historic market manipulation. Hwang even took many of Tiger Asia’s employees with him to Archegos, including all four defendants in this case. As the government wrote in its sentencing memorandum, “[f]ew have committed fraud at the scale Hwang achieved here; virtually none have done so after a previous sanction for wrongdoing.”

The Scheme. In this case, Hwang perpetrated a massive market manipulation scheme with multiple layers that prosecutors described as a “pump and brag scheme,” including multiple acts of fraud. Hwang lied to major Wall Street banks about the composition, concentration. and liquidity of Archegos’s portfolio to secure and retain billions of dollars in financing. He used stock purchases along with derivatives to acquire, and at the same time hide, huge positions designed to pump up the stock prices of a number of public companies, particularly in the tech and media sectors. The bubble burst when those stock prices started to fall. Archegos had built up enormous positions through the use of derivatives called “total return swaps,” which allowed the firm to gain—and conceal, because they did not have a public reporting requirement—significant exposure to stocks without actually owning them. By March 2021, when the value of those positions declined sharply, it triggered margin calls from the banks that had extended credit to Archegos.

As the banks demanded more collateral to cover the losses, Hwang initially decided to engage in a flurry of additional buying in a vain attempt to reverse the downward slide in the prices for the stocks he was manipulating. In the process, he also ramped up the campaign of deception, deliberately misleading the banks about the composition of the Archegos portfolio and the cash position and financial condition of Archegos. Archegos even told the banks that it faced a “liquidity” problem, not a “solvency” problem. These manipulative trading patterns and deceptions failed. Stocks slid further, the margin calls from the banks continued, and Archegos was unable to meet those margin calls, leading to a cascade of forced liquidations of Archegos’s positions. This caused a further drop in the prices of the stocks involved, exacerbating the losses for Archegos, the banks, and investors more widely. According to the government, “More than $100 billion in apparent market value for nearly a dozen companies disappeared within days.” Hwang was reported to have personally lost billions of dollars in a matter of days. The Wall Street Journal reported that Hwang lost $8 billion in 10 days, while Bloomberg News reported that Hwang lost $20 billion in 2 days. In any case, the scandal highlighted the enormous amount of financial risk that can be introduced into the financial system by using leveraged trading strategies.

A Vast, Intentional, and Destructive Scheme. The collapse of Archegos inflicted widespread financial harm. Investors who purchased the relevant stocks at artificial prices lost the value they believed their investments held, the banks collectively lost tens of billions of dollars, and Archegos employees, many of whom were required to invest 25% or more of their bonuses with Archegos as deferred compensation, lost millions of dollars. The scandal ultimately contributed to the collapse of Credit Suisse.

Considering all the factors that reveal the scope, scale, and impact of any fraudulent scheme, this one was historic. It spanned a year or more in the planning and execution; it was fully intentional; it was egregious by nature, involving elaborate market manipulation and acts of fraud; and it was motivated by sheer greed aimed at generating billions of dollars of profits for the benefit of Hwang and his family office, at the expense of the markets, investors, and banks. It is equally clear that Hwang orchestrated and controlled the scheme through his own actions and those who followed his orders—all of it against a backdrop of Hwang’s history of prior acts of fraud in the financial markets.

The Prosecution. On April 25, 2022, the Department of Justice indicted Bill Hwang and three others on charges of racketeering conspiracy, securities fraud, market manipulation, and wire fraud, each of which carries a potential sentence of 20 years in prison. As the government alleged in its indictment, Bill Hwang and his co-conspirators used Archegos:

as an instrument of market manipulation and fraud, with far-reaching consequences for other participants in the United States securities markets, companies whose stock prices they manipulated, innocent employees of Archegos whose savings they gambled, and the financial institutions left holding billions of dollars in losses.

Two of the four defendants, Scott Becker and William Tomita, pled guilty, cooperated with the government in the prosecution of Hwang, and testified against him at his two-month trial this summer. The fourth, former Chief Financial Officer, Patrick Halligan, refused to cooperate and was also convicted. His sentencing is scheduled for January 2025.

Hwang’s Sentencing Position. On November 8, 2024, Hwang’s attorneys filed a sentencing memorandum on his behalf. In that memo, Hwang argues for non-custodial sentence, i.e., no jail time. And Hwang’s lawyers offer brazen justifications for leniency. For example, they point out that “sentencing courts in this circuit routinely grant downward variances of 55 percent to more than 96 percent to white collar defendants. They do so even when those defendants knowingly and repeatedly lie, make substantial profits in doing so, and obstruct justice.” Hwang therefore contends that he too should benefit from the profoundly unfair sentencing pattern that often favors the white-collar criminal—notwithstanding his fraud and the billions of dollars in profits he sought at the expense of so many.

This aspect of Hwang’s desperate effort to avoid prison is especially appalling. First, as the government points out in its brief, Hwang would be hard pressed to prove that those who have committed frauds on his scale are generally allowed to walk away. Second, to the extent there are shortcomings in white collar crime enforcement, the solution is to raise the bar, not accept weak sanctions that will continue the pattern of virtually incentivizing fraud. It is precisely because white collar crime is often poorly prosecuted and sanctioned that Hwang should be subject to appropriately harsh penalties given the enormity of his crimes. It’s also a matter of fundamental fairness. When there are so many other non-white-collar criminals convicted of much less significant lawbreaking who are spending years if not decades in prisons across America, how can a justice system worthy of its name ever be viewed as fair if there is no prison time for white-collar criminals. Equal justice under law is at stake—as well as American’s faith, trust, and confidence in the justice system—in white collar cases and that should remain uppermost in mind when determining sentencing.

Emphasizing his charitable work, Hwang’s lawyers argue that he, “is deserving of an even greater downward variance.” In particular, Hwang’s attorneys point to his involvement with Grace & Mercy, a charitable organization that he and his wife founded with “90 percent of their personal wealth.” Grace & Mercy, Hwang claimed, “has distributed grants to no fewer than 450 organizations that work to battle homelessness, poverty, and human trafficking, among many other philanthropic initiatives.”

But the government discounts Hwang’s attempt to hide behind a veneer of generosity and respectability. And rightly so. Giving away money that does not belong to you is not the same as “service to others” or represent a “central organizing principle of [your] life.” Rather, it is mere self-aggrandizement at best. In this case, Hwang’s charitable work was nothing more than part of his concerted effort to create an image of extreme wealth to keep the banks lending. As the government wrote in its sentencing memorandum “Hwang used his foundation’s office space and corporate apartments to commit the crime; and Hwang hired his co-conspirators to cushy jobs at his foundation after Archegos collapsed.” For these reasons, Hwang’s charitable work does not warrant the “downward variance” that Hwang’s attorneys urge. It certainly should not earn him a get-out-of-jail-free card.

The Government’s Position. The government submitted an extensive and damming 73-page sentencing memorandum (“GSM”). It recounts Hwang’s recidivist past and the details of the enormous Archegos fraud. It then analyzes the many factors under the sentencing guidelines that warrant a severe sentence, including the magnitude of the losses; the sheer number of victims; the sophistication of the crimes; and Hwang’s role as architect and leader of the scheme.

The government broadly summarizes the salient points in these terms:

“First, as the Court learned over two months of trial, Hwang pursued a multi-billion fraud that altered the American stock market and inflicted extraordinary losses on his business counterparties. Hwang transformed his private hedge fund, Archegos, into an instrument of crime and used lies and manipulative trading strategies to rig the stock market in his favor. For a time, it succeeded. Hwang’s personal wealth grew from around $2 billion to more than $30 billion.” GSM at 1.
“Second, Hwang’s fraud was neither fleeting nor aberrant. Hwang labored for months to control the markets, personally directing hundreds of manipulative trades and training, encouraging, and expecting his subordinates to use deceit to obtain financing from counterparties to enable still more trading. Hwang’s conduct represents his second effort to cheat his way to personal success.” GSM at 1.
“Third, Hwang does not accept responsibility for his actions. He denies he did anything wrong at Tiger Asia. He denies he did anything wrong at Archegos. He denies any role in the billions in losses suffered by his business counterparties, his former employees, or the market as a whole. He denies he ever misled anyone or agreed with others to mislead. . . . Perhaps most troublingly, he has at no time and in no manner expressed any remorse or regret for the harm that his trading caused others.” GSM at 2.
“Fourth, rather than reckon with what he has done, Hwang urges the Court to focus on his philanthropy. Of course, the Court must consider Hwang’s personal works and circumstances, along with all the Section 3553(a) factors. But Hwang’s philanthropy—enabled, as with Hwang’s offenses, only by virtue of Hwang’s extraordinary wealth—does not justify a noncustodial sentence or show his crimes to be inexplicably out of character. Indeed, Hwang’s respect for his charity proved secondary to his participation in the offense . . . .” GSM at 2-3.

This picture is damming indeed. Hwang is an “unrepentant recidivist [who] led one of the largest securities fraud schemes in history and caused billions in losses.”

Finally, the government explains the basis, in light of the facts, for its sentencing recommendation:

that Hwang be sentenced to 21 years in prison;
that he be ordered to forfeit his interest in all of the Archegos entities that formed part of his racketeering enterprise, as well as the proceeds he obtained and used during the course of the fraud, amounting to over $12 billion; and
that he be ordered make restitution to victims of their losses in the amount of at least $9.8 billion.

With respect to victims, the government explains the scope of the restitution order:

[T]he Court should order restitution to two classes of victims: (a) Archegos counterparties that suffered losses from their business dealings with Archegos and (b) innocent Archegos employees whose deferred compensation amounts Hwang gambled away as part of his scheme. The Government does not seek to compel Hwang to restitute all the market participants who suffered losses as a result of his manipulative trading schemes because the “number of identifiable victims is so large as to make restitution impracticable.”

Thus, the untold number of investors who suffered harm from the fraud will not share in any money Hwang pays in restitution, but the banks, integral players in the scandal, will. This is wrong.

How Does the Sentencing Recommendation Stack Up? As we have said before, if the white-collar crime spree is to be ended, justice must be served from the suites to the streets. Unfortunately, enforcement against white-collar financial crime is often so infrequent, ineffective, and weak that it virtually rewards past lawbreaking and incentivizes future lawbreaking. To be effective, a collection of sanctions must be applied to those who engage in white collar crime, especially where victims suffer a huge toll. They include prison sentences, fines, disgorgement orders, injunctions, permanent bars from the industry, and others (See Appendix A).

Here, the government’s sentencing recommendation includes some of the key elements. First, of course, this prosecution is holding the individuals who perpetrated the crimes accountable, not just the entities through which the scheme was perpetrated. Further, a recommended sentence of 21 years is at least strong enough to have a real impact in terms of punishment and deterrence. In addition, the government recommends orders of forfeiture and restitution that total, at a minimum, over $20 billion, both of which are clearly appropriate sanctions.

What’s missing? The government makes no mention of a monetary penalty. Perhaps the prosecutors believe that further monetary sanctions can add little in the way of punishment or deterrence, given the magnitude of the forfeiture and restitution orders to which Hwang will likely be subject. Indeed, at the eleventh hour, Hwang’s attorneys filed a brief in response to the GSM, brazenly arguing that Hwang should not have to pay restitution at all, but even if it is ordered, Hwang cannot pay it as he is “only” worth north of $60 million. Setting aside the absurdity of his plea of poverty, there is value in imposing a monetary sanction, in addition to the other monetary punishments. If nothing else, it signals the seriousness with which the government views the crimes. It is another way to punish and deter white collar crime and it sends a powerful and necessary message. At a minimum, the government should explain its thinking surrounding a criminal fine.

Finally, and perhaps most important, the government’s proposed restitution order raises serious questions that remain unanswered. These questions surely cast doubt on the fairness of the proposed restitution order. It will primarily benefit the counterparty banks that did business with Hwang in the course of the fraud, while doing nothing to help those investors who traded in the stocks that Hwang manipulated and who suffered losses when the scheme, and stock prices, collapsed. This is on its face grossly unfair. The banks actually facilitated the fraud and agreed to deal with Hwang for the purpose of profiting. Perhaps the banks were unwitting facilitators, but the record raises questions even on that issue, indicating that there were compliance lapses. Is there more to learn about the banks’ participation? Did some of them know or have reason to know that Hwang was engaged in a manipulation scheme yet chose to turn a blind eye and continue their involvement given the potential profits at stake? And as between those banks and everyday investors, who is better able to absorb the losses? The banks, surely. The record is not complete on these important questions. At a minimum, the restitution order should provide relief for those investors, under the type of receivership mechanism that is often used to distribute to victims the proceeds that are collected from wrongdoers.

Lessons Learned About the Need for Regulatory Reforms. The Archegos debacle did not occur in a vacuum. It was enabled by lax regulatory policies that have allowed excessive risk into our financial markets. As Better Markets has advocated for years, there are a number of policies that could have prevented the Archegos scandal and that going forward can reduce the likelihood of such a scandal reoccurring in the future. For example:

Including derivatives in short sale reporting. As Better Markets explained in its April 2022 comment letter submitted to the SEC in response to the agency’s proposal to bring more transparency to short selling activity (“Short Position and Short Activity Reporting by Institutional Investment Managers”), we have long believed that the SEC needed to remove the loopholes that allowed investment managers to exclude derivatives positions that are functionally equivalent to short positions from the calculation of the reporting threshold. As we explained in our comment letter, if the SEC were to fail to close this loophole, many managers would likely shift their direct short positions into derivatives positions that pose the same risks and concerns but continue to be hidden from view — as Bill Hwang at Archegos is alleged to have done with respect his long positions. Fortunately, the SEC addressed these concerns when it finalized its rule on Short Position and Short Activity Reporting by Institutional Investment Managers in October 2023. Under the new rule, institutional investment managers that meet or exceed certain specified reporting thresholds are required to report, on a monthly basis using the related form, specified short position data and short activity data for equity securities, and account for derivatives that affect the reported short positions.
Reporting of large SBS positions. In August 2023, Better Markets filed a comment letter in response to the SEC’s reopened rule proposal to require public reporting of large security-based swap (SBS) positions. The new rule, Rule 10B-1, would require any person with a security-based swap position that exceeds a certain threshold to promptly file with the Commission a schedule disclosing, among other things:

“(1) the applicable security-based swap position;

“(2) positions in any security or loan underlying the security-based swap position; and

“(3) any other instrument relating to the underlying security or loan, or group or index of securities or loans.”

In our comment letter, we noted that the SBS market continues to pose risks to the broader financial system. We noted how this was clearly illustrated in March 2021 when the hidden bets of Archegos and Hwang exploded, causing huge losses for some banks, driving down the stock prices of several companies and severely rattling markets. The Archegos meltdown confirmed the need for additional transparency in the SBS market, and the SEC’s reopened proposal would help ensure that large SBS positions are publicly reported. That information will better equip investors and regulators to identify and respond to the buildup of potential risks in the markets.

Antifraud provisions in SBS trading. In a March 2022 comment letter to the SEC regarding the Commission’s proposed rules prohibiting fraud and manipulation in security-based swaps, Better Markets critiqued the SEC for introducing a safe harbor in the proposed rule, prompted by industry concerns that the anti-fraud and anti-manipulation rules could cover the innocent exercise of non-volitional rights or obligations under a security-based swap following the acquisition of material non-public information. The new rule proposed to prohibit fraud and manipulation in the exercise of the ongoing rights and obligations that are unique characteristics of security-based swaps—an important adjunct to the general anti-fraud protections in the securities laws. However, industry concerns about the potential overbreadth of the rule led the SEC to include an affirmative defense that weakened the final rule. However, as we pointed out in our comment letter, these concerns are unfounded and the defense was unnecessary. Worse, this provision threatens to insulate culpable acts of fraud carried out through the use of material non-public information.
Transparency in beneficial ownership reporting. In March 2022, the SEC proposed to adopt amendments to the rules that govern beneficial ownership reporting. In a comment letter supporting the rule, Better Markets argued that the rule would enhance transparency and market stability by ensuring that certain types of derivatives holdings count toward the level of beneficial ownership required to be reported. And as we noted in our press release at the time, we know from the Archegos debacle that derivatives can be used to acquire massive, highly leveraged, and systemically dangerous accumulations of interests in companies, all of which should be subject to greater transparency. Fortunately, the SEC’s rule to modernize beneficial ownership reporting, finalized in October 2023, will help to reduce the risk of another Archegos-like crisis from occurring by requiring market participants to provide more timely information on their positions, including interests in all derivative securities (including cash-settled derivative securities) that use the issuer’s equity security as a reference security.
Reforming family offices. The Archegos scandal was also enabled by the so-called “family office loophole,” which exempts family offices from regulation as investment advisers under the Investment Advisers Act of 1940. Given the enormous growth of family office investment firms in recent years, the relative lack of oversight and scrutiny that family offices receive compared to traditional hedge funds is cause for concern. The stock arguments in opposition to greater oversight, including the notion that the investors in such funds don’t need protection because of their wealth and supposed sophistication, are not persuasive. That sophistication is largely a myth, and massive losses from mismanagement or illegal conduct can certainly overwhelm the resources of even the most affluent investors.

Other Archegos Related Resources. Other Better Markets advocacy relating to the issues raised by the Archegos trading scandal include the following:

APPENDIX A

Properly Punishing and Detering White-Collar Lawbreakers and Criminals

There is a corporate crime spree in America, particularly in the financial industry as Better Markets has detailed over the years. Clearly the lawbreakers have not been deterred by the civil and criminal punishments that the regulatory agencies and the Department of Justice have imposed. While there are a number of reasons for the shortcomings in white collar crime enforcement, we believe foremost among them is the inexcusable failure to personally and meaningfully punish corporate executives, supervisors, and other responsible individuals. Only personal accountability will stop the crime spree.

After all, banks don’t commit crimes, bankers do. And they almost always do it for the money. But just taking away all the money gained via the lawbreaking is not sufficient because that’s just a break-even proposition for the wrongdoer. The key is imposing real consequences that can more effectively punish and deter. Here is a summary list of penalties that should be included in virtually every white-collar case.

For individuals:

A full and complete statement of facts that discloses the details of who did what so that the public is properly informed.
Disgorgement of all direct and indirect ill-gotten gains (broadly defined).
Civil monetary penalties that
1. exceed the total compensation (in whatever form) received by the lawbreaker during the period of lawbreaking; and
2. result in a meaningful net loss to the lawbreaker so that the monetary cost of lawbreaking is unmistakably clear.
Civil injunctions or cease and desist orders prohibiting any future violations, to trigger additional sanctions including contempt sanctions in the event of repeat violations.
Permanent or temporary bars from service on boards of public companies or the assumption of other positions in the financial industry.
Cooperation in any related investigations.
To ensure that the executives, supervisors, and other responsible individuals actually suffer the penalties imposed,
1. prohibitions against indemnification, insurance, or any other type of coverage or action that would defray any of the penalties imposed, and
2. prohibitions against treating monetary sanctions as tax deductible.
Criminal prosecution, where appropriate,
1. to include prison sentences for individuals that reflect the seriousness of the violations

For Corporations:

A full and complete statement of facts that discloses the details of who did what so that the public is properly informed.
Disgorgement of all direct and indirect ill-gotten gains (broadly defined).
Civil monetary penalties in an amount that is material to the corporation.
Consumer relief designed to remediate the harm that the violations caused to consumers and investors.
Cooperation in any related investigations.
All changes to business operations that are necessary to address the violations, including changes in board composition or management; restrictions on business activities; limits on growth; separation of business units; retention of outside consultants; enhanced compliance systems; and others.
Independent monitors to oversee remedial sanctions that take effect over time.
Criminal prosecution, where appropriate, of the primary company, not just peripheral subsidiaries that in effect shield the parent from the consequences of the lawbreaking.

For All Defendants:

In enforcement actions brought in court, there should be review of settlements by a judge, to ensure the terms are in the public interest and that the agreements contain a full account of the facts, the violations, and the individuals involved.

Memo