External Controls: Fining, Stock Dilution, Changing Internal Governance, Court Ordered Adverse Publicity, and Community Service

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Table 4.3 Classifications of Corporate Punishments from French and Fisse This table summarizes material from Brent Fisse, "Sanctions Against Corporations: The Limitations of fines and the enterprise of Creating Alternatives." This article is found in the book, Corrigible Corporations and Unruly Law and provides a taxonomy of different forms of punishment for corporations. It helps rate a corporate punishment in terms of whether it targets the guilty, produces a positive change within the corporation, avoids Cofee's deterrence trap, and minimizes interference in what Stone terms the corporate black box. For full reference to book see bibliography below.
	Descript- ion	Example	Target of Punish- ment	Deter- rence Trap Avoided?	Non- finan- cial Values Addres- sed?	Respon- sive Adjust- ment	Inter-ference with Corpor- ate Black Box
Mone- tary Exact- ion	Fines	Pentagon Procure- ment Scandals	Harms innocent	Fails to Escape	Few or None Targeted	None	No inter-ference
Stock Dilut- ion	Dilute Stock and award to victim		Stock-holders (Not necess- arily guilty)	Escapes by attacking future earnings	Few or None	Limited	No inter-ference
Probat- ion	Court orders internal changes (special board appoint-ments)	SEC Voluntary Disclosure Program	Corporat- ion and its Members	Escapes since it mandate organiz-ational changes	Focuses on manage- ment and sub- group values	Passive Adjust- ment since imposed from outside	Substan- tial entry into and inter-ference with corpor- ate black box
Court Ordered Adverse Public- ity	Court orders corporat- ion to publicize crime	English Bread Acts (Hester Prynne shame in Scarlet Letter)	Targets corporate image	Escapes (although adverse publicity indirectly attacks financial values)	Loss of prestige/ Corpor- ate shame / Loss of Face/ Honor	Active adjust- ment triggered by shame	No direct inter-ference (corpor- ation motive to restore itself)
Commu- nity Service Orders	Corporat- ion performs services mandated by court	Allied chemical (James River Pollution)	Represent- ative groups/ individ- uals from corporat- ion	Escapes Since targets non- financial	Adds value to commu- nity	Passive or no adjust- ment: some- times public does recognize that cs is punish- ment	None

Requirements of Sarbanes-Oxley (From Dyrud: 37)

Provide increased protection for whistle-blowers
Adhere to an established code of ethics or explain reasons for non-compliance
Engage in "full, fair, timely and understandable disclosure"
Maintain"honest and ethical" behavior.
Report ethics violations promptly
Comply with "applicable governmental laws, rules, and regulations"
Dyurd cites: ELT, Ethics and Code of Conduct, n.d.; http://www.elt-inc.com/solution/ethics and code of conduct training obligations.html

Ammended Federal Sentencing Guidelines (Dyrud 37)

Establishing standards and procedures to prevent and detect criminal conduct
Promoting responsibility at all levels of the program, together with adequate program resources and authority for its managers
Exercising due diligence in hiring and assigning personnel to positions with substantial authority
Communicating standards and procedures, including a specific requirement for training at all levels
Monitoring, auditing, and non-internal guidance/reporting systems
Promoting and enforcing of compliance and ethical conduct
Taking reasonable steps to respond appropriately and prevent further misconduct in detecting a violation

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External Controls: Fining, Stock Dilution, Changing Internal Governance, Court Ordered Adverse Publicity, and Community Service