​​​​​Baserman  Law

A new criminal law targeted at the rating agencies would be justifiable under longstanding criminal theories such as retributivism and deterrence.  Retributive justice is the legal theory by which criminal punishment is justified, as long as the offender is morally accountable.  According to retributivism, a criminal is thought to have a debt to pay to society, which is paid by punishment. The punishment is also sometimes said to be society's act of paying back the criminal for the wrong done.  The classical form of retributivism, espoused by scholars such as Immanuel Kant, argues that society has a duty, not just a right, to punish a criminal who is guilty and culpable, that is, someone who has no justification or excuse for the illegal act.[1]    Credit rating agencies should not exist without consequence, as the opinions they proffer influence, sometime exclusively, millions of investors in their purchasing.  When these opinions are faulty, the pecuniary damage can be extreme, including the loss of retirement accounts and the bankruptcy of sovereigns and municipalities.  Those people justifiably reliant upon faulty ratings certainly experience harm, and yet there is no current legal avenue for societal retribution.  Criminal retribution has justified criminalization of other white collar offenses, and should be extended to CRAs.

Deterrence is another viable justification for a criminal statute targeting CRA’s.  Deterrence, both general and specific, is the theory positing an individual would avoid engaging in a particular anti-social behavior or act, so as to avoid fines or imprisonment.[2]  If a statute were to threaten criminal sanction for a recklessly promulgated faulty rating by a CRA, officials operating these institutions would undoubtedly alter their behavior to avoid punishment.  Credit ratings would become well-researched, receive more forethought, and ultimately achieve the social good of enhanced reliability, and sustainable economic growth.

[1] http://www.beyondintractability.org/print/2377
[2] Black’s Law Dictionary 481 (Deluxe 8th ed. 2004).

Below is a section of Mark Baserman Jr's Fall 2011 article

regarding White Collar Crime: