Former Federal Trade Commissioner and Consumer Financial Protection Bureau Director Rohit Chopra writes that as the federal government circumvents the rule of law by pardoning corporate infractions and crimes in exchange for political favors, individual states, citizens, and businesses will need to pursue private actions against corporate wrongdoing.
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Scott Sheffield is no stranger to big oil and big money. As the leader of Pioneer Natural Resources, Sheffield helped shepherd an energy extraction boom in the Permian Basin in West Texas and New Mexico. But rather than compete fairly, Sheffield knew that he could obtain even bigger profits by contriving hikes in global commodity prices. An investigation by the United States Federal Trade Commission (FTC) uncovered a slew of evidence that Sheffield was colluding with representatives from the OPEC oil cartel to drive up the price of energy—a key driver of post-COVID inflation across the globe.
The FTC’s investigation found that Sheffield exchanged hundreds of text messages with OPEC representatives to facilitate a cut in production and an increase in prices. In 2024, Exxon Mobil agreed that Sheffield would be banned from gaining a seat on Exxon’s board of directors as part of its deal with the FTC to acquire Pioneer Natural Resources. But recently, the FTC—with little explanation—voted to rewrite the settlement to allow Sheffield to take a seat.
Notably, days after the initial settlement that banned Sheffield from sitting on Exxon’s board of directors, Sheffield’s son made massive contributions to the Trump political apparatus—some of the biggest of the 2024 election cycle. Sheffield, for his part, claims to be innocent and is allegedly still fuming that Exxon ever agreed to the settlement.
This is just one of many examples of the new practice of corporate pardons in the U.S. Rather than examine evidence and the law, regulators and prosecutors appear to be deferring to political influence to immunize allies and punish enemies. Many longtime prosecutors who believe in the rule of law are now rethinking their playbook to ensure their investigations and prosecutions don’t get killed by political influencing operations. But ultimately, the best response to this disturbing trend is to decentralize law enforcement and give power back to individual citizens.
Consider the series of pardons issued over the last few months by the Consumer Financial Protection Bureau (CFPB), which quietly dropped lawsuits against JPMorgan Chase, Wells Fargo, Bank of America, Capital One, and scores of other firms. Curiously, not all cases have been dropped, leaving companies wondering whether there is a new process to lobby for immunity.
They are probably right. Consider the scandal at the Department of Justice (DOJ) involving Hewlett Packard Enterprise’s takeover of Juniper Networks. The merger seems to be a cut-and-dried case of an illegal merger, given the enormous reach each company has in enterprise networking equipment, like Wi-Fi networks. The DOJ sued to block the merger, but recent reporting has revealed how politically connected lobbyists were able to influence the process and extract an easy settlement. Political appointees, like Roger Alford, who didn’t play ball with these outside influencers were shown the door.
This is a noteworthy phenomenon at federal regulatory and law enforcement agencies. While there is room for different views on appropriate resolutions for corporate wrongdoing, companies with political contacts and influence are now able to end ongoing litigation and even be released from legal settlements they had agreed to.
The newly established norm of corporate pardons may permanently upend the approach to enforcement in the U.S. It is already forcing civil servants seeking to enforce the law to come up with a new playbook. That new playbook will not be welcomed by the politically connected corporate wrongdoers benefitting from recent corporate pardons.
First, regulators and prosecutors will now have a strong incentive to litigate their cases in the court of public opinion rather than in a court of law. To reduce the likelihood that future political leadership will shut down or dismiss a case addressing corporate wrongdoing, we will likely see regulators and prosecutors push for the release of damaging evidence in advance of a trial. In theory, doing so would reduce the likelihood that conflicted higher ups can push to abandon the case.
Second, regulators and prosecutors will no longer initiate litigation or finalize resolutions through internal agency procedures. Instead, they’ll go to court. At the CFPB, the new political leadership appointed by President Donald Trump petitioned a court to allow it to kill a settlement the agency had reached with a mortgage company accused of illegal lending discrimination, including the refund of an agreed-upon penalty. (Ironically, the case was originally filed during the term of a previous director appointed by Trump during his first term). A federal judge blocked the petition.
In the U.S., regulatory agencies typically pursue cases and settlements through the agency administrative process, which are the procedures by which agencies implement the law. But since corporate pardons have no judicial review using this process, it is now subject to serious abuse. By filing lawsuits and settlements in federal courts, a judge will need to sign off on changes.
Third, regulators and prosecutors will look to enlist other law enforcement agencies to bring actions against lawbreakers. If state attorneys general—or even foreign counterparts of U.S. agencies—bring parallel actions, that limits the opportunities for mischief.
But, of course, none of these will actually stop corporate wrongdoers from deploying corrupt practices to sidestep accountability for violating the law. One of the core remedies to restore the rule of law is to decentralize enforcement through private actions.
Throughout U.S. law, civil law enforcement is the responsibility of both public actors and private actors. A broad range of statutes empower victims and third parties to bring claims against wrongdoers. One of the best ways that citizens have to challenge abuses is the U.S. “qui tam” provision attached to the False Claims Act, which allows whistleblowers to receive rewards for bringing actions against entities that defraud the government. Private actions have already proved to be powerful deterrents to wrongdoing in a number of domains, but it is not consistent throughout U.S. law. Other whistleblower programs can help stop wrongdoing, but sometimes need public enforcers—and their political leadership—to agree.
Given the dormancy of consumer protection enforcement at the federal level, the time may be ripe for federal and state statutes to give consumers and businesses the ability to bring private enforcement actions against those who engage in misconduct. This could be fashioned in a way that is similar to how shareholders can bring claims against firms that defraud shareholders.
While this can never fully replace civil law enforcement capabilities of a public agency, it can reduce some of the creep of corruption that can distort markets and the rule of law. Even without federal legislation, individual states can enact new powers to protect their economies and citizens from corporate crime.
Fair enforcement of law is essential for both democracy and well-functioning markets. If the U.S. continues to lurch toward a culture of pardons as political favors, the costs will be incalculable.
Author Disclosure: Rohit Chopra is the former director of the Consumer Financial Protection Bureau and a former commissioner of the Federal Trade Commission. The author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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