Shearman & Sterling LLP | Government Regulatory Enforcement Blog | DOJ Announces Formalization Of Policy On Corporate Resolution Penalties <br >  
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  • DOJ Announces Formalization Of Policy On Corporate Resolution Penalties 
    On May 9, 2018, the U.S. Department of Justice (“DOJ”) released a long-awaited policy regarding corporate enforcement and resolution.  The policy—entitled “Policy on Coordination of Corporate Resolution Penalties” (“Policy”)—will be incorporated into the U.S. Attorney’s Manual.  U.S. DOJ, Policy on Coordination of Corporate Resolution Penalties.  On the same day, Deputy Attorney General Rod J. Rosenstein provided remarks about the Policy at the New York Conference on the Foreign Corrupt Practices Act and at the New York City Bar White Collar Crime Institute.  Mr. Rosenstein explained that the Policy recognizes that companies may be subject to numerous regulatory authorities—both in the U.S. and abroad—which may result in disproportionate penalties.  The Policy generally instructs DOJ attorneys “to appropriately coordinate with one another and with other enforcement agencies in imposing multiple penalties on a company for the same conduct.”  DOJ Press Release, Deputy Attorney General Rod J. Rosenstein Delivers Remarks.     

    In his remarks, Mr. Rosenstein highlighted four core components of the Policy:
    (1) First, the Policy emphasizes that the DOJ’s criminal enforcement authority should not be used for purposes unrelated to the investigation and prosecution of crimes.  Specifically, a threat of criminal prosecution should not be used to extract a higher settlement in a civil case. 
    (2) Second, the Policy directs DOJ attorneys to coordinate with one another to achieve equitable resolutions in cases involving multiple DOJ components investigating the same misconduct.  Such coordination includes crediting and apportioning financial fines, forfeitures, and penalties.
    (3) Third, the Policy encourages DOJ attorneys, where possible, to coordinate with other federal, state, local, or foreign enforcement authorities seeking to resolve a case involving the same misconduct.
    (4) Fourth, the Policy sets forth factors for DOJ attorneys to consider in determining whether multiple penalties for similar conduct serve the interests of justice.  The factors include the egregiousness of the wrongdoing, statutory mandates regarding penalties, the risk of delay in finalizing a resolution, and the adequacy and timeliness of a company’s disclosures and cooperation with the DOJ.

    While the policy unveiled by Mr. Rosenstein does not represent a dramatic change in course for DOJ enforcement, its formalization in the U.S. Attorney Manual represents a strong signal that it is committed to avoiding the “piling on” of multiple enforcement actions.  It should further lead to more consistent application of this approach across U.S. Attorney’s Offices.  Mr. Rosenstein also emphasized, however, that “cooperating with a different agency or a foreign government is not a substitute for cooperating with the Department of Justice,” and that the DOJ “will not look kindly on companies that come to us after making inadequate disclosures to secure lenient penalties with other agencies or foreign governments.” 
    In other words, while the DOJ will no doubt consider penalties from parallel proceedings in formulating an appropriate resolution, the DOJ will have the final say on whether a company is entitled to a full or partial offset for such penalties.  Accordingly, to take full advantage of the implications of the Policy, companies should continue to try and seek global resolution of multiple regulator and agency inquiries.  Coordinating these multiple layers of inquiry can help avoid claims down the road by DOJ that prior resolutions were insufficient, or based on an incomplete set of facts.