Assistant Attorney General
On
Under the revised Corporate Enforcement Policy:
-
Companies that voluntarily self-disclose misconduct will be eligible for declinations, even where aggravating circumstances that may ordinarily warrant a criminal prosecution are present, provided specific conditions are met.
- Companies that do not voluntarily self-disclose, but engage in extraordinary cooperation and remediation, will be eligible for a fine reduction of up to 50% from the low end of the
U.S. Sentencing Guidelines ("Guidelines") range. However, there will be no presumption of entitlement to such a reduction, and the most substantial reductions will be reserved for only the "most extraordinary levels" of cooperation and remediation. Recidivists will be eligible for a similar reduction, but generally not from the low end of the Guidelines range. - For companies that voluntarily self-disclose misconduct, fully cooperate with an investigation, and timely and appropriately remediate, but do not receive a declination under the Corporate Enforcement Policy,
DOJ will recommend a reduction in the company's fine of 50% to 75% from the low end of the Guidelines range, provided the company is not a criminal recidivist. Recidivists will be eligible for a similar reduction, but generally not from the low end of the range. - The company voluntarily disclosed immediately upon becoming aware of the allegation of misconduct;
- At the time of the misconduct and disclosure, the company had in place an effective compliance program and system of internal accounting controls that enabled the identification of the misconduct and led to the voluntary self-disclosure; and
- The company engaged in "extraordinary" cooperation and remediation.
- As
WilmerHale has advised in prior Client Alerts, companies, their directors and officers, and their internal and external legal counsel should understand that althoughDOJ 's focus remains squarely on individual accountability, the Corporate Enforcement Policy uses both carrots and sticks to incentivize companies to partner in that aim. DOJ continues to emphasize the importance of companies voluntarily self-disclosing misconduct to support its stated first priority of prosecuting individual wrongdoing and has formally extended potential declinations in the wake of voluntary self-disclosures even in the presence of aggravating circumstances— although now such declinations are only available in situations where the following high bars are met: (1) the company made "immediate" disclosure upon identification of misconduct; (2) the company engaged in "extraordinary" cooperation and remediation; and (3) the company had in place an effective compliance program and system of internal accounting controls that enabled the identification of the misconduct and led to the voluntary self-disclosure. As such, companies and their counsel should carefully—and quickly—evaluate the benefits of voluntary self-disclosure upon the identification of possible misconduct and weigh these benefits against the costs and pitfalls of inviting a potentialDOJ investigation, as well as potential investigation by other authorities that do not offer similar incentives or have similar policies.-
Likewise, as
DOJ will consider the sufficiency of corporate compliance programs when determining leniency in situations where a company has made a voluntary self-disclosure and aggravating circumstances are present, companies should conduct periodic risk assessments and carefully structure compliance programs in accordance with the Guidelines elements of an effective corporate compliance program.8 Companies should also consider the factors set out inDOJ 'sSeptember 2022 Further Revisions to Corporate Criminal Enforcement Policies Following Discussions WithCorporate Crime Advisory Group , as discussed in aWilmerHale Client Alert. Companies with well-designed, tested, and effective compliance programs will be better positioned to detect individual misconduct at the outset, may be eligible for declinations even where aggravating circumstances exist, and will be better positioned to avoid compliance monitorships upon resolution. -
Given the considerable favorable consequences of being awarded "extraordinary" cooperation and remediation credit (i.e., up to 50% credit in non-voluntary self-disclosure cases and the possibility of, in voluntary self-disclosure cases, a declination in the face of aggravating circumstances), the bounds of what
DOJ may consider "extraordinary" will become quite significant. The favorable consequences may also incentivize corporate leadership to take the most cooperative posture possible withDOJ amidst any investigation and to implement and test remediation steps early in the investigation. Companies should think creatively at the outset of any investigation about how best to cooperate and communicate withDOJ . Presumably, watching newDOJ settlements will assist in identifyingDOJ 's expectations for "extraordinary" cooperation and remediation. There will no doubt be challenges in balancing corporate needs and meetingDOJ expectations. -
Other
U.S. authorities, like theSecurities and Exchange Commission , do not yet offer this kind of regime for enforcement transparency or penalty credit. Nor do foreign enforcement authorities. Therefore,DOJ 's continued efforts to encourage voluntary disclosures and corporate cooperation may create complications for companies that face regulation and enforcement across federal agencies and internationally. -
Although the requirements for leniency have become somewhat more formalized, as always,
DOJ enjoys significant discretion in its investigating, charging, and sentencing decisions—almost always because the devil is in the details in determining a company's eligibility for leniency under the Corporate Enforcement Policy.
Throughout his remarks, AAG Polite reiterated that the Corporate Enforcement Policy aligns with the Division's top priority, as stated in prior
Background
The Corporate Enforcement Policy originally was introduced as a pilot program specific to the Division's Foreign Corrupt Practices Act (FCPA) Unit in
Speaking from a podium at the
AAG Polite outlined three primary changes to the Corporate Enforcement Policy, as follows.
1. Expanded Eligibility for Declinations Even with Aggravating Circumstances
The Corporate Enforcement Policy continues to attempt to incentivize voluntary self-disclosures from companies by asserting that when a company has voluntarily self-disclosed misconduct to the Criminal Division, fully cooperated, and timely and appropriately remediated, there is a presumption that the company will receive a declination (with required disgorgement of profits obtained from the unlawful conduct), absent aggravating circumstances involving the seriousness of the offense or the nature of the offender. AAG Polite provided a non-exhaustive list of examples of such aggravating circumstances (also set forth in the Corporate Enforcement Policy) that included egregious or pervasive misconduct; involvement by executive management; significant resulting corporate profits; or criminal recidivism.
Under the revised Corporate Enforcement Policy,
Although this revision to the Corporate Enforcement Policy may appear to mark a significant policy change,
2. Increased Potential Credit for Voluntary Self-Disclosures that Do Not Receive a Declination
AAG Polite also announced that if a company voluntarily self-discloses misconduct, fully cooperates, and timely and appropriately remediates, but does not receive a declination under the Corporate Enforcement Policy,
Previously, the reduction available in such circumstances was 50% off of the low end of the Guidelines range. The revised policy also added that
3. Increased Potential Credit for Companies that Do Not Voluntarily Self-Disclose but Engage in Extraordinary Cooperation and Remediation
AAG Polite also announced that, even in instances where companies do not voluntarily self-disclose, prosecutors will have a greater range of options to incentivize those companies' "extraordinary" cooperation and remediation. The revised Corporate Enforcement Policy provides that if a company is not a criminal recidivist and provides "extraordinary" cooperation and remediation, it may receive a recommended fine reduction of up to 50% off of the low end of the Guidelines range. This represents a significant change from the prior Corporate Enforcement Policy, which provided for a maximum penalty reduction of 25% off of the low end of the Guidelines range, absent voluntary self-disclosure.
AAG Polite quickly clarified that companies are not presumptively entitled to this reduction, which he framed as the maximum reduction available only for the best corporate cooperators and remediators. Instead, every company under investigation "starts at zero" and earns credit for remediation and cooperation based on degree. Only those non-self-disclosing companies that are truly extraordinary in their cooperation and remediation efforts will receive this credit.
What Is "Extraordinary" Cooperation and Remediation?
Near the close of his remarks, AAG Polite addressed a resultant question: what might make cooperation and remediation "extraordinary"? He explained that "extraordinary" cooperation and remediation may differ from "full" cooperation and remediation more in degree than in kind, noting that immediacy, consistency, degree, and impact would be significant concepts in the Division's calculation.
For example, in terms of cooperation, AAG Polite highlighted the importance of collaboration with individuals in the company, consistent candor and truthfulness, obtaining evidence that might not otherwise be attainable (e.g., obtaining information from abroad or recording conversations), making witnesses available to testify at trial, and providing evidence that might lead to additional individual charges and convictions. He did not, however, provide examples of "extraordinary" remediation.
Key Considerations for Companies
In light of the Corporate Enforcement Policy's expansion beyond the FCPA to virtually all forms of corporate misconduct that are investigated by the
Footnotes
1. "Assistant Attorney General
2. With this expansion, the Corporate Enforcement Policy now applies not just to FCPA cases, but also to all corporate criminal matters handled by the Criminal Division, which includes cases handled by the Money Laundering and Asset Recovery Section and the Fraud Section (which includes the FCPA Unit, Healthcare Frauds Unit, and Market Integrity and Major Frauds Unit).
3. Id.
4.
5. In March, April, and November of 2019,
6. See
7. See
8. See
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
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