Law Commons^™

Why Agencies Punish, Max Minzner

William & Mary Law Review

In addition to promulgating regulations, federal administrative agencies penalize entities that violate their rules. In 2010 alone, the National Highway Traffic Safety Administration imposed a statutory maximum $16.4 million penalty on Toyota, and the Securities and Exchange Commission recovered $535 million from Goldman Sachs, the largest civil penalty a financial services firm has ever paid. The academic literature proposes two major theories explaining why agencies might seek these monetary penalties. First, agencies might seek to deter misconduct by using civil penalties to raise the expected cost of regulatory violations above the cost of compliance. Alternatively, agencies might use civil penalties …