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Deputy Attorney General Lisa Monaco Announces Revisions to DOJ Corporate Criminal Enforcement Policies

September 16, 2022 Download PDF

Speaking at New York University School of Law on September 15, 2022, Deputy Attorney General Lisa Monaco announced five significant changes to the Department of Justice’s criminal enforcement policies.[1] These revisions are designed to incentivize companies to voluntarily report misconduct and aggressively remediate wrongdoing by offering “a combination of carrots and sticks—with a mix of incentives and deterrence” to give “general counsels and chief compliance officers the tools they need to make a business case for responsible corporate behavior.”

According to Deputy Attorney General Monaco, these policy revisions stemmed from a year-long evaluation of DOJ’s corporate criminal enforcement guidelines intended to strengthen how the DOJ prioritizes and prosecutes corporate crime. In connection with this review, DOJ received input from external parties, including public interest organizations, ethicists, audit committee members, in-house attorneys, former corporate monitors, and members of the business community and defense bar.

Key Takeaways

  • With Deputy Attorney General Monaco’s announcement, DOJ has signaled a renewed focus on corporate criminal investigations and prosecutions and set out criteria designed to incentivize corporate cooperation and effective remediation. These newly announced policies hark back to some of the central enforcement priorities of the Barack Obama administration, which subsequently received less attention by former President Trump’s DOJ.
  • In evaluating whether to bring criminal charges against a company, the DOJ will consider whether the company has met the newly articulated criteria, including self-reporting and timely clawback of executive compensation received by wrongdoers, and will evaluate the company’s prior criminal, civil and regulatory record.
  • Chief among the factors DOJ will consider in determining a company’s cooperation credit will be the timeliness of the corporation’s cooperation and its willingness to share information about misconduct by individuals. The revised policies signal that a delay in disclosure of significant facts may put a company’s cooperation credit at risk. Likewise, in light of the government’s renewed focus on holding individuals accountable for corporate misconduct, cooperating companies are expected to prioritize the production of evidence that will allow prosecutors to timely investigate and seek charges against culpable individuals.
  • In light of these revised policies, companies should evaluate their compliance programs to ensure that they remain robust and aligned with DOJ’s enforcement guidelines. This includes monitoring for potential misconduct, timely reporting misconduct to enforcement authorities when appropriate, and effectively remediating misconduct, including through the clawback of executive compensation when warranted.

Policy Changes to Incentivize Corporate Self-Reporting, Individual Accountability, and Remediation of Wrongdoing

In her remarks, Deputy Attorney General Monaco articulated five key revisions to DOJ policies on corporate criminal enforcement. Simultaneous with her remarks, the DOJ issued a department-wide memo elaborating on these polices and instructing prosecutors on their implementation.[2] The five tenets of DOJ’s revised policies are:

  • Corporate Self-Reporting and Emphasis on Individual Accountability. First, the DOJ will require cooperating companies to come forward with evidence more quickly. Companies that engage in “undue or intentional delay in producing information or documents—particularly those that show individual culpability,” will receive reduced credit for cooperation or no credit at all. The DAG explained that, “[i]f a cooperating company discovers hot documents or evidence, its first reaction should be to notify the prosecutors,” and that “[g]amesmanship with disclosures and productions will not be tolerated.” As further detailed in the department-wide memo, cooperating companies must produce such information “swiftly and without delay,” and “[c]ompanies that identify significant facts but delay their disclosure will place in jeopardy their eligibility for cooperation credit.”
    Deputy Attorney General Monaco emphasized the Department’s focus on evidence relevant to assessing “individual culpability,” and underscored that cooperating companies should prioritize production of such evidence. In determining a company’s credit for cooperating, “information pertaining to individual misconduct will be most significant.”
    Additionally, prosecutors will be “on the clock” to expedite investigations, particularly as to individuals. Prosecutors entering into a resolution with a corporation must, at the same time and where appropriate, seek to bring criminal charges against individual defendants. When a corporate case reaches resolution before the investigation of individual wrongdoers has concluded, prosecutors must develop an investigative plan detailing the remaining work on the individual cases and a timeline for completion.
  • History of Corporate Misconduct. Second, the new policies expand on the DOJ’s prior commitment to address corporate recidivism by evaluating a company’s “full criminal, civil, and regulatory record” when deciding on the appropriate resolution. This evaluation will involve multiple considerations.
    • The DOJ will not weigh all prior misconduct the same, but instead will place greater weight on prior criminal resolutions in the United States and prior misconduct involving the same employees.
    • The DOJ will afford dated conduct less weight—namely, criminal resolutions occurring more than 10 years before the misconduct at issue, and civil or regulatory resolutions occurring more than five years prior.
    • Prosecutors will consider the “root causes” of prior misconduct, such as whether prior misconduct occurred under the same management team or leadership as current misconduct.
    • In evaluating corporate misconduct within highly regulated industries, the DOJ will compare the company’s history to that of other similarly situated companies in the same industry to determine what falls outside the norm.
    • When a company acquires an entity with a history of compliance problems, the DOJ will not afford unfavorable treatment to the acquiring company so long as it takes steps to promptly and appropriately address the acquired entity’s compliance issues.
    • The DOJ will “disfavor multiple, successive non-prosecution or deferred prosecution agreements” with the same company. Successive agreements will not be permitted without review and approval by DOJ leadership, and companies cannot assume that they are entitled to a non-prosecution agreement or deferred prosecution agreement, “particularly when they are frequent fliers.”
  • Voluntary Self-Disclosure. Third, the DOJ will reward companies that voluntarily self-disclose misconduct to the government, and every DOJ unit that investigates corporate criminal activity will be required to develop a formal, documented policy that incentivizes self-disclosure. These policies will reflect at least two key principles. Notably, absent aggravating factors, “the Department will not seek a guilty plea when a company has voluntarily self-disclosed, cooperated, and remediated misconduct.” Further, the DOJ will not require an independent compliance monitor for corporations that self-report if the company has developed and tested a robust compliance program by the time of resolution.
  • Corporate Compensation Systems. Fourth, when evaluating the strength of a corporate compliance program, prosecutors will favor companies that seek to incentivize compliance-promoting behavior through financial compensation to employees, and to deter criminal conduct with financial clawback provisions and other financial penalties imposed on individuals involved in misconduct.
  • Independent Compliance Monitors. Fifth, DOJ policies will seek “to reduce suspicion and confusion” about corporate compliance monitors by providing detailed guidance to prosecutors about how to identify the need for a monitor, select the monitor, and oversee the monitor’s work. Similarly, monitors will be chosen pursuant to a transparent, consistent, and documented process, and the monitor’s scope of work will be required to hew closely to the misconduct and related compliance deficiencies.

Deputy Attorney General Monaco’s announcement follows on her October 20, 2021 speech to the American Bar Association in which she signaled that the DOJ would adopt a more aggressive stance against corporate wrongdoing by focusing on three central goals—incentivizing companies to disclose information regarding individuals involved in alleged misconduct; avoiding favorable treatment to recidivist companies by assessing a company’s full civil, criminal and regulatory record; and renewing the focus on corporate monitorships.[3] With her September 15, 2022 announcement, DAG Monaco has provided specific guidance to companies on how the DOJ will seek to accomplish these goals.

This announcement comes on the heels of the September 12, 2022 arrival of DOJ’s new criminal fraud chief, Glenn Leon. A former federal prosecutor and former chief ethics and compliance officer for Hewlett Packard, Leon will oversee DOJ’s implementation of these new policies in every federal prosecutor’s office across the country.

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[1]     https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-delivers-remarks-corporate-criminal-enforcement

[2]     https://www.justice.gov/opa/speech/file/1535301/download

[3]        https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-gives-keynote-address-abas-36th-national-institute; https://www.paulweiss.com/practices/litigation/white-collar-regulatory-defense/publications/deputy-attorney-general-announces-renewed-doj-focus-on-corporate-criminal-enforcement?id=41581

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