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Feds Followed Proper Protocol in KPMG Case: Justice Dept.

Paul McNulty, deputy attorney general at the U.S. Department of Justice, joined "Power Lunch" to address controversial issues raised after U.S. District Judge Lewis A. Kaplan dismissed charges Monday against 13 former KPMG employees.

One of the issues raised during the case was whether companies paid defendants' attorney charges. This policy, McNulty said, was changed in December, and the Justice Department no longer questions who pays the fees.

Companies, and not just individuals, commit crimes, said McNulty. He added, therefore, that CEOs and presidents of companies are under scrutiny.

"We want to make sure that we don't just focus on lower-level people," McNulty said. "We encourage our prosecutors to focus on the leadership of a company, because that's where you are going to see the moral tone set, and where integrity begins."

Whether the executive action under investigation involves looting the company or just filing questionable information, corporate leaders could be in violation of the law, he said.

At any rate, McNulty said fewer acts of fraud are taking place, as "integrity has really picked up, corporate governance has changed and shareholders have a much bigger voice."

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  • Sue Herera is a founding member of CNBC, helping to launch the network in 1989. She is co-anchor of "Power Lunch."

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