Secondary Titles (2)
- Supreme Court Fellow, Supreme Court of the United States, 2011-2012
- Board Member, The Poynter Center for the Study of Ethics and American Institutions, Indiana University, 2017-present
Todd Haugh is an Assistant Professor of Business Law and Ethics at Indiana University’s Kelley School of Business. His scholarship focuses on white collar and corporate crime, business and behavioral ethics, and federal sentencing policy, exploring the decision-making processes of the players most central to the commission and adjudication of economic crime and unethical business conduct. His work has appeared in top law and business journals, including the Northwestern University Law Review, Notre Dame Law Review, Vanderbilt Law Review, Fordham Law Review, Georgia Law Review, and the MIT-Sloan Management Review. Prof. Haugh’s expertise relating to the burgeoning field of behavioral compliance has led to frequent speaking and consulting engagements with major U.S. companies and ethics organizations. He is also regularly quoted in national news publications such as the New York Times, Wall Street Journal, Forbes, Bloomberg News, and USA Today, as well as various legal, business, and popular blogs.
A graduate of the University of Illinois College of Law and Brown University, Prof. Haugh has extensive professional experience as a white collar criminal defense attorney, a federal law clerk, and a member of the general counsel’s office of the United States Sentencing Commission. In 2011, he was chosen as one of four Supreme Court Fellows of the Supreme Court of the United States to study the administrative machinery of the federal judiciary.
Prior to joining the Kelley School, where he teaches courses on business ethics, white collar crime, and critical thinking, Prof. Haugh taught criminal procedure and advanced legal writing and advocacy at DePaul University College of Law and Chicago-Kent College of Law. He is a recipient of numerous teaching and scholarly awards, including a Trustees Teaching Award and multiple Innovative Teaching Awards, and a Jesse Fine Fellowship from the Poynter Center for the Study of Ethics and American Institutions, to which he now serves as a board member. In 2019 he was awarded the Distinguished Early Career Achievement Award by the Academy of Legal Studies in Business. In both his scholarship and teaching, Prof. Haugh takes a unique look at how ethics, law, business, and psychology interact in today’s complex world.
Industry Expertise (1)
Areas of Expertise (9)
White Collar Crime
Supreme Court Fellow
Supreme Court of the United States, 2011-2012
Distinguished Early Career Achievement Award
Academy of Legal Studies in Business, 2019
Finalist, Outstanding Junior Faculty Award
Indiana University, 2019
Virginia Maurer Distinguished Ethics Paper Award
Academy of Legal Studies in Business, 2019
Outstanding Proceedings Paper Award
Academy of Legal Studies in Business, 2019
Innovative Teaching Award (co-recipient)
Kelley School of Business, 2019
Finalist, Master Teacher Competition
Midwest Academy of Legal Studies in Business, 2019
Finalist, Sauvain Undergraduate Teaching Award
Kelley School of Business, 2019
Hoeber Memorial Award for Excellence in Research
Academy of Legal Studies in Business, 2018
McGraw-Hill Education Best Paper Award
MBAA International, 2018
Finalist, Sauvain Undergraduate Teaching Award
Kelley School of Business, 2018
Jesse Fine Fellowship
The Poynter Center for the Study of Ethics and American Institutions, 2016 - 2017
Virginia Maurer Best Ethics Paper Award
Academy of Legal Studies in Business, 2017
Best Paper Award
Mid-Atlantic Academy of Legal Studies in Business, 2017
Trustees Teaching Award
Kelley School of Business, 2017
McGraw-Hill Education Distinguished Paper Award
MBAA International, 2016
Innovative Teaching Award
Kelley School of Business, 2015
University of Illinois College of Law: J.D., Law 2002
Brown University: B.A. 1999
Abbey Stemler, Joshua E. Perry & Todd Haugh
Digital platform-based businesses such as Uber, eBay, and Google have become ubiquitous in our daily lives. They have done so by expertly harnessing technology to bring supply and demand side users together for commercial and social exchange. Users are happy to let these platform companies play “matchmaker” because transaction costs are lowered—it is easier to find or give a ride, buy or sell a product, or obtain almost any kind of information than ever before—and platforms are happy to be at the center of the exchange, taking advantage of network effects to grow wildly successful. Despite their successes, however, there is an increasing unease with the methods that platforms use to sustain their multi-sided markets—namely, users question whether they are being manipulated by some of their favorite companies. This Article offers a first-of-its kind analysis into both the legality and ethicality of platform companies, specifically their use of technologically enhanced behavioral science to mediate user transactions. After providing a descriptive account of how platform companies operate and succeed, including an in-depth analysis of the choice architecture platforms employ to structure almost every decision made on the platform, the Article evaluates whether platforms manipulate users. Various activities of platform companies are assessed and charted on a platform manipulation matrix as part of an integrated framework that evaluates the autonomy costs platforms impose upon users. Once done, it becomes clear that much of what platforms do is indeed manipulative; yet much is also beneficial to users and companies alike. The Article then offers a path forward, an ethical foundation to be used by platforms, users, and regulators aimed at reducing manipulative practices—the Code of the Platform.
Caremark is undoubtedly one of the most important decisions in corporate governance and compliance. The opinion’s articulation of the standards for holding board members liable for failing to properly monitor the corporation is said to have transformed Delaware law. Exactly why that is, however, carries some mystery. The opinion, composed largely of dicta, held very little from a legal standpoint. Moreover, by coupling lofty prescriptions with a standard of review that ensured no director would actually be found liable, the opinion was destined to fall short of its goal to remake board oversight of compliance. Yet, when the opinion is analyzed through a behavioral lens, which this Symposium Article undertakes on the twenty-first anniversary of the opinion’s drafting, the mystery of Caremark becomes clearer—everything from its outsized impact to its underwhelming legacy. This analysis also highlights the opportunities that behavioral compliance strategies hold for creating truly effective efforts to lessen unethical and illegal acts in business. In the end, this may be Caremark’s true legacy, one that allows its lofty aspirations to take effect in a meaningful and lasting way.
Corporate compliance in most companies is carried out under the assumption that unethical and illegal conduct occurs in a more or less predictable fashion. That is, although corporate leaders may not know precisely when, where, or how compliance failures will occur, they assume that unethical employee conduct will be sprinkled throughout the company in a roughly normal distribution, exposing the firm to compliance risk but in a controllable manner. This assumption underlies many of the common tools of compliance—standardized codes of conduct, firm-wide compliance trainings, and uniform audit and monitoring practices. Because regulators also operate under this assumption, what is deemed an “effective” compliance program often turns on the program’s breadth and consistent application. But compliance failures—lapses of ethical decision making that are the precursors to corporate crime—do not necessarily conform to this baseline assumption. As with other aspects of criminal behavior, unethical and illegal acts in business may follow a “fat-tailed” distribution that makes extreme outcomes more likely. This volatility, exhibited both in the frequency of compliance lapses and the intensity of their harm, is a function of how individual decision making interacts with the complex networks within corporations. By failing to recognize this phenomenon, the compliance and regulatory community has mistargeted its efforts, focusing too much on the trivial many while not paying enough attention to the “power few”—those influential individuals within companies that foster extreme compliance risk. Using the Wells Fargo fake accounts scandal as a backdrop, this Article explains how corporate compliance has failed to consider the effects of the power few, how that failure has limited compliance effectiveness, and how corporate compliance and business regulation may be properly reoriented through an increased focus on behavioral ethics risk management.
Companies are nudging. That is, they are using the tools of behavioral science as pioneered by behavioral economists and promoted by policymakers to steer employees toward welfare-maximizing options. While companies began nudging to increase employee health, safety, and financial literacy, choice architecture is now being used to make employees more ethical. “Behavioral ethics nudging” is seen as the future of corporate compliance because it offers an evidence-based, cost effective way to reduce the risks of respondeat superior liability. Amid that promise, however, lies a nagging unease. Behavioral ethics research demonstrates that ethical decision making is influenced, often subconsciously, by situational and social factors. When a company alters the conditions under which its employees make decisions, their ethical behavior can be changed without them knowing it. Thus, the intent of behavioral ethics nudging may be laudable—to increase employee ethicality and improve compliance—but it is also susceptible to becoming a tool of unwanted behavioral manipulation.
This Article undertakes the first detailed analysis of the role of behavioral ethics nudging in corporate compliance. Viewing the issue from an empirical and normative lens, it finds that while nudging offers important compliance opportunities, it must be implemented with caution. That is because nudging employees to be more ethical is conceptually distinct from governmental nudges popularized as a way of promoting public welfare. Companies that simply import public policy nudges into the workplace may find them wholly ineffective as a compliance strategy. Moreover, behavioral ethics nudging may violate deeply held notions of personal autonomy, especially when it surreptitiously capitalizes on employees’ cognitive irrationalities. While some autonomy costs may be justified under legal doctrines and consequentialist analysis, a significant question remains whether behavioral ethics nudges are ethical themselves. Drawing on this analysis, which is supported by extensive behavioral ethics research, the Article offers a simple framework companies can use when contemplating employing behavioral ethics nudging as part of their compliance regimes.
Corporate compliance is becoming increasingly “criminalized.” What began as a means of industry self-regulation has morphed into a multi-billion dollar effort to avoid government intervention in business, specifically criminal and quasi-criminal investigations and prosecutions. In order to avoid application of the criminal law, companies have adopted compliance programs that are motivated by and mimic that law, using the precepts of criminal legislation, enforcement, and adjudication to advance their compliance goals. This approach to compliance is inherently flawed, however—it can never be fully effective in abating corporate wrongdoing. Criminalized compliance regimes are inherently ineffective because they impose unintended behavioral consequences on corporate employees. Employees subject to criminalized compliance have greater opportunities to rationalize their future unethical or illegal behavior. Rationalizations are a key component in the psychological process necessary for the commission of corporate crime—they allow offenders to square their self-perception as “good people” with the illegal behavior they are contemplating, thereby allowing the behavior to go forward. Criminalized compliance regimes fuel these rationalizations, and in turn, bad corporate conduct. By importing into the corporation many of the criminal law’s delegitimizing features, criminalized compliance creates space for rationalizations, facilitating the necessary precursors to the commission of white collar and corporate crime. The result is that many compliance programs, by mimicking the criminal law in hopes of reducing employee misconduct, are actually fostering it. This insight, which offers a new way of conceptualizing corporate compliance, explains the ineffectiveness of many compliance programs and also suggests how companies might go about fixing them.
The harms of overcriminalization are usually thought of in a particular way — that the proliferation of criminal laws leads to increasing and inconsistent criminal enforcement and adjudication. For example, an offender commits an unethical or illegal act and, because of the overwhelming depth and breadth of the criminal law, becomes subject to too much prosecutorial discretion and faces disparate enforcement or punishment. But there is an additional, possibly more pernicious, harm of overcriminalization. Drawing from the fields of criminology and behavioral ethics, this Article makes the case that overcriminalization actually increases the commission of criminal behavior itself, particularly by white collar offenders. This occurs because overcriminalization, by delegitimatizing the criminal law, fuels offender rationalizations. Rationalizations are part of the psychological process necessary for the commission of crime — they allow offenders to square their self-perception as “good people” with the illegal behavior they are contemplating, thereby allowing the behavior to go forward. Overcriminalization, then, is more than a post-act concern. It is inherently criminogenic because it facilitates some of the most prevalent and powerful rationalizations used by would-be offenders. Put simply, overcriminalization is fostering the very conduct it seeks to eliminate. This phenomenon is on display in the recently decided Supreme Court case Yates v. United States. Using Yates as a backdrop, this Article presents a new paradigm of overcriminalization and its harms.
This September marks six years since the collapse of Lehman Brothers and the height of the financial crisis. Recently, a growing debate has emerged over the Justice Department’s failure to criminally prosecute Wall Street executives for their role in creating the crisis. One side of that debate contends the government has failed to bring to justice individual wrongdoers — primarily the heads of banks operating in the mortgage-backed securities market — instead preferencing enforcement decisions that target corporations, resulting in punishments that are “little more than window-dressing.” The other side argues that cases against individuals are precluded by the realities of the federal criminal justice system, and that “corporate headhunting” will only inhibit meaningful regulatory reform.
It is difficult, however, to evaluate these competing claims without proper context. This Article explores the recent conviction and sentencing of Wall Street executive Kareem Serageldin as a means of providing that context. Although Serageldin has been trumpeted as the “the most senior Wall Street official” to be sentenced for conduct committed during the financial crisis, and his conviction was framed as a victory in punishing those accountable for the financial collapse, a critical look at his case reveals he committed only a mundane white collar crime marginally related to the crisis. This disconnect creates a unique lens through which to understand and evaluate the current state of — and debate surrounding — financial crisis prosecutions. And it ultimately highlights the merits, and shortfalls, of each camp’s arguments. The Article concludes by offering something largely absent from the current debate: specific proposals for how we might go about prosecuting individuals so as to prevent the next crisis.
“So why did Mr. Gupta do it?” That question was at the heart of Judge Jed Rakoff’s recent sentencing of Rajat Gupta, a former Wall Street titan and the most high-profile insider trading defendant of the past 30 years. The answer, which the court actively sought by inquiring into Gupta’s psychological motivations, resulted in a two-year sentence, eight years less than the government requested. What was it that Judge Rakoff found in Gupta that warranted such a modest sentence? While it was ultimately unclear to the court exactly what motivated Gupta to commit such a “terrible breach of trust,” it is exceedingly clear that Judge Rakoff’s search for those motivations impacted the sentence imposed.
This search by judges sentencing white collar defendants — the search to understand the “why” motivating defendants’ actions — is what this article explores. When judges inquire into defendants’ motivations, they necessarily delve into the psychological justifications defendants employ to free themselves from the social norms they previously followed, thereby allowing themselves to engage in criminality. These “techniques of neutralization” are precursors to white collar crime, and they impact courts’ sentencing decisions. Yet the role of neutralizations in sentencing has been largely unexamined. This article rectifies that absence by drawing on established criminological theory and applying it to three recent high-profile white collar cases. Ultimately, this article concludes that judges’ search for the “why” of white collar crime, which occurs primarily through the exploration of offender neutralizations, is legally and normatively justified. While there are potential drawbacks to judges conducting these inquiries, they are outweighed by the benefits of increased individualized sentencing and opportunities to disrupt the mechanisms that make white collar crime possible.
Ted Kaczynski and Bernie Madoff share much in common. Both are well-educated, extremely intelligent, charismatic figures. Both rose to the height of their chosen professions — mathematics and finance. And both will die in federal prison, Kaczynski for committing a twenty-year mail-bombing spree that killed three people and seriously injured dozens more, and Madoff for committing the largest Ponzi scheme in history, bilking thousands of people out of almost $65 billion. But that last similarity — Kaczynski’s and Madoff’s plight at sentencing — may not have had to be. While Kaczynski’s attorneys tirelessly investigated and argued every aspect of their client’s personal history, mental state, motivations, and sentencing options, Madoff’s attorneys offered almost nothing to mitigate his conduct, simply accepting his fate at sentencing. In the end, Kaczynski’s attorneys were able to convince the government, the court, and their client that a life sentence was appropriate despite that he committed one of the most heinous and well-publicized death penalty-eligible crimes in recent history. Madoff, on the other hand, with almost unlimited resources at his disposal, received effectively the same sentence — 150 years in prison — for a nonviolent economic offense. Why were these two ultimately given the same sentence? And what can Madoff, the financier with unimaginable wealth, learn from Kaczynski, the reclusive and remorseless killer, when it comes to federal sentencing?