In what was to have a profound effect on corporate America, unique legal standards were enacted in the United States in November 1991. The standards, referred to as the U.S. Federal Sentencing Guidelines for Organizations (“Guidelines”), used a carrot and stick approach to create incentives for thousands of corporations to report wrongdoing, to cooperate with authorities while accepting responsibility for misconduct, as well as to establish or enhance their compliance or ethics programs. As opposed to discussing the Federal Sentencing Guidelines for individuals convicted of federal crimes, this entry will focus on the Federal Sentencing Guidelines for Organizations, their impact, utilization by the courts, and their effectiveness with respect to improving legal and ethical behavior.

The Guidelines were developed by the United States Sentencing Commission, a ...