The Trillion-Dollar Mark: Corporate Misconduct Cases Reach a Dubious Milestone

Staff Report From Georgia CEO

Thursday, April 11th, 2024

Regulatory fines, criminal penalties, and class-action settlements paid by corporations in the United States since 2000 have now surpassed $1 trillion. Over that period of time, total annual payouts for corporate misconduct grew from around $7 billion per year in the early 2000s to more than $50 billion in recent years, according to a new report by Good Jobs First.

This amounts to a seven-fold increase in current dollars — a 300% increase in constant dollars.

These figures are derived from Violation Tracker, a wide-ranging database containing information on more than 600,000 cases from about 500 federal, state and local regulatory agencies and prosecutors as well as court data on major private lawsuits.

The database shows that 127 large parent companies have each paid more than $1 billion in fines and settlements over the past quarter-century. The most penalized industries are financial services and pharmaceuticals, followed by oil and gas, motor vehicles, and utilities.

"The fact that penalties have reached the 10-figure level suggests that we have been living through a continuous corporate crime wave," said Philip Mattera, Good Jobs First research director and lead author of the report. "Every year, companies pay out billions of dollars for a wide range of offenses. Many large corporations are fined or enter into settlements over and over again, often for the same or similar misconduct."

The Occupational Safety and Health Administration accounts for more than one-third of the 600,000 cases in Violation Tracker, which includes only fines of $5,000 or more. But because OSHA's fines have been kept artificially low and are often below that threshold, the agency accounts for only $3 billion of the $1 trillion total (for example, a company in 2024 pays a maximum fine of just over $16,000 when an employee is killed on the job).

Among the findings:

Bank of America has by far the largest penalty total at $87 billion. It and other banks, both domestic and foreign, account for six of the 10 most penalized parent companies.

Other bad actors include BP (mainly because of the Deepwater Horizon disaster), Volkswagen (because of its emissions cheating scandal), Johnson & Johnson (largely because of big settlements in cases alleging its talcum powder causes cancer), and PG&E (due to cases accusing it of causing or contributing to wildfires in the West).

Recidivism is a major issue. Half a dozen parent companies—all banks—have each paid $1 million or more in over 100 different cases, led by Bank of America with 225. Two dozen parents have at least 50 of these cases on their record.

All of the top 10 and 95 of the 100 most penalized parent companies are publicly traded. The most penalized privately held company is Purdue Pharma, which is going out of business for its role in causing the opioid crisis.

In more than 500 of the cases involving criminal charges, the U.S. Justice Department offered the defendant a deferred prosecution or non-prosecution agreement, thus allowing it to avoid entering a plea. Numerous companies have gotten more than one of these leniency agreements.

Cases brought by state and local government prosecutors and regulators account for $215 billion of the trillion-dollar total. Nearly two-thirds of that amount came from actions brought by groups of state attorneys general or financial regulators acting in concert. California and New York far surpass the rest of the states in the penalties achieved through single-state actions.

We call on prosecutors and regulators to supplement monetary penalties with other kinds of remedies, such as forcing companies to divest from lines of businesses in which they were engaged in serious misconduct. The Justice Department also needs to be more aggressive in bringing criminal charges against individual corporate executives in the most serious cases.

We also call for greater consistency among states in their commitment to enforcement. Taking what appears to be a half-hearted approach to enforcement in states including South Dakota and Utah deprives residents of the protections contained both in state regulations and in the federal laws the states help to enforce.

"Numerous states also need to improve their disclosure practices, so that the public can see how much enforcement they are actually doing," said Good Jobs First research analyst Siobhan Standaert, co-author of the report.