American federal judge Jed S. Rakoff is renowned for his understanding of moral and legal dilemmas facing corporate America. One of his noteworthy findings concerns the relative responsibility of corporations and their employees for criminal activity. According to Judge Rakoff, even though a business may make money off of the illegal actions of some of its workers, holding the entire company accountable may have unanticipated repercussions for innocent people.

Picture a big ship traversing choppy waters. Navigating through choppy waters is the responsibility of the captain and crew, but what if one or two of the sailors choose to ruin the trip? Everyone else on board, including innocent passengers, suffers needlessly if the entire ship is held accountable for the deeds of these few outlaws.

Similar to this, in business contexts, unethical behavior is frequently committed by a small percentage of employees. The many employees who were not involved in those activities and may have even attempted to stop them could be unfairly punished if the entire company is punished. Because they worry about collateral damage in the event that misconduct occurs elsewhere in the company, responsible people may be deterred from working for respectable companies.

Instead of imposing broad penalties that impact entire organizations and their extensive networks of stakeholders, Judge Rakoff supports a more nuanced approach where legal repercussions concentrate on the particular people or small groups involved in criminal activity.