In a speech on September 15, 2022, Deputy Attorney General Lisa Monaco of the DOJ announced sweeping changes in corporate criminal enforcement. Her remarks, delivered at the New York University School of Law, come almost a year after their announcement last fall regarding the DOJ’s increased focus on individual accountability and corporate policing.
Specifically, Monaco noted what she characterized as new changes to DOJ enforcement policy in the investigation of criminal wrongdoing by corporations, with a focus on the following five topics.
More Timely Disclosure of Individual Misconduct
Since 2015, the DOJ has required corporations to disclose relevant, non-privileged facts about individual misconduct in order to obtain cooperation credit. However, in the speech, Monaco voiced concerns over corporations delaying the release of pertinent information, therefore, slowing down prosecutors from doing their job. As a result, to receive full cooperation credit moving forward, corporations must produce on a timely basis all relevant, non-privileged facts and evidence about individual misconduct such that prosecutors have the opportunity to effectively investigate and seek criminal charges against culpable individuals. Companies that identify significant facts but delay their disclosure will place their eligibility in jeopardy. Companies seeking cooperation credit ultimately bear the burden of ensuring that documents are produced quickly.
Weighing Prior Sanctions/History of Misconduct
As discussed in 2021, in determining how best to resolve an investigation of corporate criminal activity, prosecutors are advised to consider the corporation’s record of past misconduct, including prior criminal, civil, and regulatory resolutions. However, not all instances of prior misconduct, are equally relevant or probative. To that end, prosecutors are being instructed to consider the form of prior resolution and the associated sanctions or penalties, as well as the elapsed time between the instant misconduct, the prior resolution, and the conduct underlying the prior resolution (i.e. they should assign the greatest significance to recent U.S. criminal resolutions and to prior misconduct involving the same personnel or management).
Clarifying the Benefits of Voluntary Self-Disclosure
Monaco’s comments emphasized the importance of self-disclosures to the DOJ’s assessment of a company’s conduct. As such, she is recommending that each DOJ component that prosecutes corporate crime review its policies on corporate voluntary self-disclosure, and if the component lacks a formal, written policy to incentivize such self-disclosure, it must draft and publicly share such a policy. Any such policy should set forth the component’s expectations of what constitutes a voluntary self-disclosure, including regard to the timing of the disclosure, the need for the disclosure to be accompanied by timely preservation, collection, and production of relevant documents and/or information, and a description of the types of information and facts that should be provided as part of the disclosure process.
Encouraging Compensation Structures that Promote Compliance
The Criminal Division will now consider a company’s compensation structure relating to misconduct and compliance in its investigative and prosecutorial decisions. Many companies have already structured compensation to incorporate compliance measures. It is clear that the Department is looking to reward this practice and encourage others to follow suit.
Defining When to Impose Independent Compliance Monitors
Last fall, the DOJ announced that it would require the use of an independent monitor more frequently as part of corporate resolutions. This memo attempts to clarify the issue by providing a list of non-exhaustive factors used to evaluate whether to impose a monitorship or not.
In matters where an independent corporate monitor is imposed, however, prosecutors are required to ensure that the monitor’s responsibilities and scope of authority are well-defined and recorded in writing and that a clear work plan is agreed upon between the monitor and the corporation- all to ensure agreement among the corporation, monitor, and Department as to the proper scope of review.
To read the complete memorandum, click here.