Judge Jed Rakoff says he’s “not a big fan of corporate criminal liability.”

“I am a big fan of individual prosecutions,” Rakoff said. “I don’t get terribly upset if I see the individuals responsible for committing the crimes being prosecuted if there is also some ancillary prosecution of the company. Even then I would not add that ancillary prosecution in most cases, although there are some cases where you can make a case for it.”

Rakoff was the keynote dinner speaker at the NYU Law School conference on Corporate Crime and Financial Misleading.

“What I fear most is not going after the people who done it,” Rakoff said. “That’s important for deterrence purposes. It’s important for accountability purposes. It avoids all of the difficult questions when you just go after the corporation — are you hurting the shareholders, who are, in most cases, totally innocent? How much are you really achieving? What is the deterrent effect? How much can you change corporate culture? All of those questions seem to me to be quite secondary to the approach of prosecuting the people who actually committed the crime.”

Judge Rakoff was asked about judicial review of deferred and non prosecution agreements.

“I do vaguely remember a judge who asked for a more substantial review of an Securities and Exchange Commission’s review of Citigroup and we know what happened to him,” Rakoff said. (In November 2011, Judge Rakoff rejected a proposed neither admit nor deny consent decree between the Securities and Exchange Commission (SEC) and Citigroup, ruling that the settlement was “neither reasonable, nor fair, nor adequate, nor in the public interest.” But in June 2014, the Second Circuit overturned Judge Rakoff’s ruling and let the SEC Citigroup settlement stand.)

“There should be greater review of deferred prosecution agreements by judges, but there are inherent limits on how much that can accomplish,” Rakoff said. “When the agreement is brought to the judge for approval, the judge knows virtually nothing about the case. There have been no prior proceedings. It’s brought as a package deal. The natural human tendency of any judge with a full docket in that situation is — hey, this is what the parties want, I’ll sign here. I don’t know that that review would be that full.”

“Among the problems of deferred prosecutions is not whether they were good at the time they were first approved, but how they worked out over time,” Rakoff said. “Sometimes it’s left to a monitor. I think that is only in one third of the cases. In two thirds of the cases, it’s just left to the government. Assistants go on to other jobs. I don’t think that monitoring is all that terrific when there is a hands on monitor.”

“When there is a hands on monitor, it depends on the monitor,” Rakoff said. “I’ve seen it be done very well. And I’ve also seen the monitors be basically coopted.”

“You look at the recidivism rates, and they are pretty high for companies that entered into deferred prosecution agreements,” Rakoff said. “Not in every case, but in a substantial number of cases. And that suggests that either the monitoring wasn’t that good or that it didn’t accomplish that much period.”

“The biggest problem I have with deferred prosecutions is too often, I’m afraid, the government takes that as wrapping up the case. The company agrees they are going to pay $2 billion, which will help fund the Department of Justice for at least another week. We get a great big press conference. We announce that this time, by gosh, they admitted x, y, and z. Although in the fine print, one of the reasons for a deferred prosecution is it doesn’t mean they get subjected to a lot of the collateral consequences. That’s all right. We are sending a message. And they are entering into all of these compliance measures. Most respectfully, I think that is very small potatoes compared to what would be accomplished by prosecuting the individuals, particularly high level individuals responsible for the crime.”

Rakoff was asked — what if the government prosecutes some sacrificial lamb lower level employee, instead of the high level responsible executives?

“Does the government get it wrong sometimes?” Rakoff asked. “Of course, but that’s not an argument for not trying. There is always a problem in these situations of scapegoating. Probably only people who love bankers are present in this room. And there are not too many here. Let the record reflect that that is a joke.”

“You look back at Enron and WorldCom where people who were guilty at the highest level were prosecuted,” Rakoff said. “You look at the savings and loan prosecutions where hundreds of people were prosecuted, right up to the top, right up to Mr. Keating and there was really no doubt about his guilt. When the government has put its mind to going after individuals, its track record is pretty good.”