Elizabeth Warren wants jail time for CEOs in Equifax style violations

In 2017, criminals stole personal data from about 143 million people from the Equifax credit scoring system. It was a huge embarrassment for the company and a headache for the millions of people affected. Equifax CEO Richard Smith, then 57, retired in September 2017, several weeks after the discovery of the loophole, with a multi-million dollar salary package.

The US Senator of Massachusetts, who has become Democratic presidential candidate, Elizabeth Warren, wants to make sure that CEOs who will be presiding over massive data breaches in the future do not get off so easily. On Wednesday, she announced the law on the responsibility of corporate executives, which would impose a prison sentence on company executives who "negligently permit or neglect to prevent" a "violation". of the law "which" affects the health, safety, finances or personal data "of 1 percent of the population of any state.

A CEO could be sentenced to one year in prison for a first offense. Repeat offenders could be three years old.

The penalty only applies to companies generating more than $ 1 billion in annual revenue. Equifax posted $ 3.4 billion in revenue in 2017. It also applies to businesses found to have violated the law or settled claims with state or federal authorities. Equifax could also qualify in this regard as the company signed a consent decree with the state's regulators last year.

That said, it seems that most data breaches would probably not trigger criminal penalties under the proposed new law. A CEO would be liable to imprisonment only if a data breach resulted from an illegal activity of the company. and if the attorneys can show that the general manager was negligent in failing to prevent it. And according to the law in force, the mere fact of being a victim of a data breach is not a crime.

Although federal data breach laws are not very stringent, states have enacted various laws on the subject, and some may enact stricter laws in the future. Thus, if a company's data management practices violate the laws of a single state and result in an offense affecting 1% of the state's population, this could be enough to engage the criminal liability of the CEO of the company.

Senator Ron Wyden (D-Ore.) Proposed an even tougher law on data privacy, providing that executives face up to 20 years in prison for violating the privacy of their clients.

Warren's proposal is part of his much broader campaign to combat corporate mischief. I focused on data breaches, but the Corporate Accountability Act allows you to sue the CEO of any company whose illegal conduct threatens the health, safety, or finances of 1% of the public. Warren points out that Wells Fargo's false accounts scandal in 2016 is another case where criminal proceedings against corporate executives would have been appropriate.

Would this bill be passed under the chairmanship of Warren? Warren is the Democratic candidate for the most prolific presidency in terms of legislative proposals. The Corporate Executive Accountability Act is one of many bills she proposed in the weeks following the launch of her campaign. Given the difficulty of passing legislation by Congress, particularly the possible Republican control of the Senate, it is unlikely that Elizabeth Warren could adopt all of her proposals, or even most of them. Between them. Thus, the law on the responsibility of company directors will probably not be promulgated anytime soon, at least in its current form.

Nevertheless, Warren's proposal reflects the mood of the Democratic populists that Warren is trying to represent. His proposal will put pressure on other Democratic candidates to adopt tougher policies against poorly behaving CEOs. And Warren has just been reelected last year. Therefore, if she does not become president, she will be able to stay in the Senate for the next four years, while continuing to demand harsher treatment of business leaders.