On October 4, 2023, Deputy Attorney General Lisa O. Monaco announced a Department of Justice-wide safe harbor policy for voluntary self-disclosures made in connection with mergers and acquisitions.  During her remarks at the Society of Corporate Compliance and Ethics’ 22nd Annual Compliance and Ethics Institute, the Deputy Attorney General said that the Safe Harbor provides companies with the presumption that the DOJ will decline criminal prosecution when they voluntarily self-disclose misconduct by companies they are acquiring or have recently acquired.

On September 15, 2022, Deputy Attorney General Lisa O. Monaco delivered remarks on the Department of Justice’s corporate prosecution priorities at New York University, at the invitation of the University’s Project on Corporate Compliance and Enforcement.  While many of her comments were simply a reiteration of existing priorities, some were potentially meaningful changes.  Indeed, by clarifying certain points and strengthening others, Monaco emphasized the “carrot and stick” approach to signal loud and clear that the DOJ remains as focused as ever on pursuing corporate crime.  She unambiguously encouraged corporations both to self-report potential criminal activity and cooperate in the investigation of culpable individuals, indicating that failure to do so could lead to severe consequences.  At the same time, as has long been the case, the policies leave somewhat subjective the true nature of any “carrot” and any “stick” that would apply in any given case, making the decision of how corporations should deal with potential criminal conduct one of the most challenging decisions corporations can face.

U.S. Attorney General Merrick Garland made two announcements this week related to the enforcement of white-collar crime by both individuals and corporations.  First, on March 2, 2022, Attorney General Garland announced the launch of Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing sanctions, export restrictions, and economic countermeasures imposed against Russia in response to its military invasion of Ukraine.  Second, on March 4, 2022, the Attorney General discussed additional resources that the Department of Justice (“DOJ”) would devote to the prosecution of white-collar crime.

On October 28, 2021, at the American Bar Association’s National Institute on White Collar Crime, Deputy Attorney General Lisa O. Monaco announced revisions to the Department of Justice’s policies, all designed to strengthen DOJ’s response to corporate crime.  Deputy AG Monaco outlined major policy changes focused on individual accountability, when cooperation credit will be given to corporations, how corporations’ prior history of misconduct will be evaluated, and when corporate monitors will be imposed.  Deputy AG Monaco said these changes were just the beginning of DOJ’s efforts to further incentivize corporations to embrace a culture of compliance, and she also announced the creation of a new DOJ Advisory Group that will focus on additional potential policy shifts.  Both were also discussed in DOJ’s Memorandum published the same day, titled “Corporate Crime Advisory Group and Initial Revisions to Corporate Criminal Enforcement Policies.”

In back-to-back speeches last week, senior Department of Justice (“DOJ”) officials emphasized that the Department would devote additional resources and attention to white-collar enforcement actions, with a specific focus on enforcement in the cryptocurrency space.  These initiatives, which contemplate additional corporate enforcement actions, reflect a break from the prior administration’s criminal enforcement priorities, which tended to focus on immigration and violent crime offenses.

On March 9, 2021, Caroline Crenshaw, a Commissioner of the Securities and Exchange Commission (“SEC”) asserted, in a speech before the Council of Institutional Investors, that the SEC has focused excessively on the indirect impact on innocent shareholders at the time of penalty when assessing corporate penalties.  Instead, she called for the SEC to revisit its approach and give less weight to innocent shareholder impact as a mitigant against large corporate penalties.
 

On February 11, 2021, the Acting Chair of the Securities and Exchange Commission (“SEC”), Allison Herren Lee, announced that the Division of Enforcement will no longer recommend to the SEC a settlement offer that is conditioned on granting a waiver.  While Acting Chair Lee described this as a return to the SEC’s “long-standing practice” of separately considering settlement negotiations and waiver requests, Allison Herren Lee, Acting Chair, SEC, Statement of Acting Chair Allison Herren Lee on Contingent Settlement Offers (Feb. 11, 2021), the decision is in fact a significant and surprising one that was opposed by two Commissioners and could have broad ramifications for the industry.  It signals, in no uncertain terms, that the SEC is looking to be extremely aggressive in enforcement, will almost certainly be far more stingy in granting waivers in future matters, and is prepared to deal with the consequences.  What remains to be seen is how the industry will respond, as the advanced assurance of waivers from the SEC is often not just a factor in a defendant’s decision to settle—for some defendants it is a critical gating item without which no settlement is possible.
 

On February 9, 2021, Acting Chair of the Securities and Exchange Commission (“SEC”), Allison Herren Lee, announced that she had authorized senior officers in the SEC’s Enforcement Division to approve the issuance of Formal Orders of Investigation without prior approval from the SEC’s commissioners.  While significantly less surprising and less consequential than her announcement from the same week regarding conditional settlement offers, this reinstatement of delegated authority reflects another instance of swinging the pendulum back in favor of more aggressive enforcement.
 

On March 23, 2020, Stephanie Avakian and Steven Peikin, co-directors of the Securities & Exchange Commission’s (“SEC”) Division of Enforcement, issued a statement reminding public companies, officers, and directors of their responsibilities related to material, non-public information in connection to the COVID-19 public health emergency.
 

 
In a development that could significantly affect how companies deal with possible export control and sanctions violations, the Department of Justice (“DOJ”) recently revised its policy regarding voluntary disclosure of trade violations.  The new policy from DOJ’s National Security Division (“NSD”), entitled “Export Control and Sanctions Enforcement Policy for Business Organizations” (“NSD Policy”), took effect December 13, 2019.  The NSD Policy supersedes the Division’s previous “Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Control and Sanctions Investigations Involving Business Organizations” (“2016 Policy”), implemented October 2, 2016.  The NSD Policy contains three major changes to the 2016 Policy.

On October 8, 2019, the Department of Justice (“DOJ”) issued a memorandum (“Memorandum”) providing guidance on how the DOJ’s prosecutors will handle inability-to-pay claims from companies, intending to provide companies—and prosecutors—with a better understanding of how to evaluate and address these claims.  Memorandum to All Criminal Division Personnel from Brian A. Benczkowski regarding Evaluating a Business Organization’s Inability to Pay a Criminal Fine or Criminal Monetary Penalty (Oct. 8, 2019).  Assistant Attorney General Brian A. Benczkowski announced the Memorandum, stating that it does not provide any new methodology, but rather merely “puts a lot more meat on the bones” of how these claims are analyzed.  Assistant Attorney General Brian A. Benczkowski Delivers Remarks at the Global Investigations Review Live New York (Oct. 8, 2019).

 

On July 3, 2019, Chairman Jay Clayton of the Securities and Exchange Commission (“SEC”) issued a Statement Regarding Offers of Settlement (the “Public Statement”) to announce a significant shift in the SEC’s process of considering settlement offers and requests to waive collateral consequences of such settlements.  SEC Public Statement, Statement Regarding Offers of Settlement (2019).  Chairman Clayton stated that he recognized “that a segregated process for considering contemporaneous settlement offers and waiver requests may not produce the best outcome for investors in all circumstances,” and thus announced “that a settling entity can request that the Commission consider an offer of settlement that simultaneously addresses both the underlying enforcement action and any related collateral disqualifications.”  Id.

On March 8, 2019, the Department of Justice (“DOJ”) released a revised version of its FCPA Corporate Enforcement Policy (the “Policy”), which provides enforcement and practice guidance to DOJ prosecutors and was formally incorporated into the U.S. Attorneys’ Manual in November 2017.  United States Attorneys’ Manual, FCPA Corporate Enforcement Policy Section 9-47.120 (as of Mar. 15, 2019).  Assistant Attorney General Brian A. Benczkowski announced the revisions to the Policy in a speech at the American Bar Association’s National White Collar Crime Institute in which he highlighted the DOJ’s commitment to transparency and the need to ensure its “ongoing process of refinement and reassessment.”  DOJ Press Release, Assistant Attorney General Brian A. Benczkowski Delivers Remarks at the 33rd Annual ABA National Institute on White Collar Crime Conference (Mar. 8, 2019).  Important changes to the Policy include expansion of the Policy in the context of mergers and acquisitions, as well as softening the DOJ’s approach to software that does not retain communications.

On November 29, 2018, Deputy Attorney General Rod Rosenstein announced revisions to the Department of Justice (“DOJ”) policy on individual accountability for corporate wrongdoing, which was originally announced in the Yates Memo of September 2015.  U.S. DOJ, Remarks at the American Conference Institute's 35th International Conference on the Foreign Corrupt Practices Act.  In response to concerns that the policy could lead to wasted resources and impede resolutions, Mr. Rosenstein announced that the revised policy requires that companies identify all individuals who were substantially involved in a potential crime in order for companies to receive cooperation credit in criminal investigations; the policy established in the Yates Memo, on the other hand, required companies to provide information on all individuals who were involved in potential misconduct, no matter how insubstantial their role.

On October 11, 2018, the U.S. Department of Justice (“DOJ”) released an updated policy regarding the selection of corporate monitors. The policy—entitled “Selection of Monitors in Criminal Division Matters” (“Policy”)—is designed to guide the DOJ’s decision-making on whether to require a monitor as part of corporate criminal resolutions.  U.S. DOJ, Selection of Monitors in Criminal Division Matters.  On the same day, Assistant Attorney General Brian A. Benczkowski provided remarks about the Policy at the NYU School of Law Program on Corporate Compliance and Enforcement Conference on Achieving Effective Compliance.  Mr. Benczkowski explained that while the DOJ continues to adhere to the view that “every case will at some stage require a deep look into the sufficiency and proper functioning of the subject company’s compliance program,” the Policy nonetheless recognizes that “the imposition of a monitor will not be necessary in many corporate criminal resolutions, and the scope of any monitorship should be appropriately tailored to address the specific issues and concerns that created the need for the monitor.”  DOJ Press Release, Assistant Attorney General Brian A. Benczkowski Delivers Remarks at NYU School of Law Program on Corporate Compliance and Enforcement Conference on Achieving Effective Compliance.  Thus, the Policy appears to signal a potentially meaningful shift away from the use of monitors by the DOJ, at least in cases involving historical conduct where companies have made meaningful efforts to remediate and invest in corporate compliance programs.

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.     

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At a March 7, 2018 Conference on Cyber Security co-hosted by Boston College and the Federal Bureau of Investigation (“FBI”), Director of the FBI Christopher Wray spoke about the FBI’s efforts to combat cyber threats.  Among other topics, Director Wray emphasized the FBI’s policy to treat companies that have experienced a cyber-attack as victims, and encouraged the need for cooperation between the public and private sectors. 

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At the recent American Bar Association’s National Institute on White Collar Crime, the Department of Justice’s (“DOJ”) Acting Head of the Criminal Division, John Cronan, announced that the Criminal Division will use the FCPA Corporate Enforcement Policy (“the Policy”) as “nonbinding guidance” in other areas of white-collar enforcement beyond the FCPA.  As a result of this expansion, absent aggravating factors, DOJ may more frequently decline to prosecute companies that promptly self-disclose misconduct, fully cooperate with DOJ’s investigation, remediate in a complete and timely fashion, and disgorge any ill-gotten gains.  Indeed, Cronan pointed to the DOJ’s recent decision to decline charges against a global bank, after the bank agreed to pay back $12.9 million in profits the DOJ claimed it obtained as a result of an alleged foreign exchange front-running scheme, as an example of the effect of this new wider application of the Policy.

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On November 29, 2017, Deputy Attorney General Rod Rosenstein delivered remarks at the 34^th International Conference on the Foreign Corrupt Practices Act (“FCPA”), in which he announced a revised FCPA Corporate Enforcement Policy.  According to Mr. Rosenstein, the Department of Justice’s (“DOJ’s”) new FCPA Corporate Enforcement Policy—an extension of the FCPA Pilot Program rolled out eighteen months prior—is designed both to aid the DOJ’s ability to identify and punish criminal conduct efficiently and also to provide “guidance and increased certainty to companies struggling with the question of whether to make voluntary disclosures of wrongdoing.”  Remarks at 3. 

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On May 12, 2017, U.S. Attorney General Jeff Sessions issued a memorandum to all federal prosecutors, entitled “Department Charging and Sentencing Policy,” which dramatically changes existing policies and procedures for federal prosecutors.  Department Charging and Sentencing Policy (May 10, 2017) (“Sessions Memorandum”).  The Sessions Memorandum requires prosecutors to (1) charge the “most serious, readily provable offense” available; and (2) disclose all facts impacting sentencing to the sentencing court and to advocate for a sentence falling within the range in the United States Sentencing Guidelines (the “Guidelines”) in most cases.  The memorandum also rescinds all inconsistent policies, including two memorandums issued by former Attorney General Eric Holder, which provided wider latitude to prosecutors in their charging and sentencing decisions.  The Sessions Memorandum cites fairness and consistency as the objectives of the new policies, seeking to “achiev[e] just and consistent results in federal cases.”   

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On February 8, 2017, the United States Department of Justice (“DOJ”), Fraud Section, issued guidance on its evaluation of corporate compliance programs in the context of criminal investigations of corporate entities.  By way of background, the United States Attorneys’ Manual outlines various principles federal prosecutors need to consider in deciding whether criminal charges against corporate entities should be pursued and how such charges should be resolved.  These principles include “the existence and effectiveness of the corporation’s pre-existing compliance program” and the corporation’s remedial efforts “to implement an effective corporate compliance program or to improve an existing one.”  United States Attorney’s Office, United States Attorneys’ Manual § 9-28.300 (1997).

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On December 29, 2016, the Department of Justice (“DOJ”) announced that it had reached final resolutions with banks that have met the requirements of the Department’s Swiss Bank Program (the “Program”).  Announced in August 2013, the Program provided a path for Swiss banks to resolve potential criminal liabilities in the United States and to participate in the Department’s ongoing investigations of tax evasion by U.S. taxpayers.  Press Release, DOJ, Justice Department Reaches Final Resolutions Under Swiss Bank Program, Dec. 29, 2016 (“DOJ Press Release”). 

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On August 30, 2016, the United States Department of the Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Association, and the Office of the Comptroller of the Currency (together “Federal Banking Agencies” or “FBAs”), released a four-page fact sheet outlining their expectations for domestic banks evaluating the regulatory risks posed by foreign financial institutions.  U.S. Department of the Treasury and Federal Banking Agencies Joint Fact Sheet on Foreign Correspondent Banking: Approach to BSA/AML and OFAC Sanctions Supervision and Enforcement (the “Fact Sheet”).  The Fact Sheet addresses the obligations of domestic banks to comply with the Bank Secrecy Act (BSA)—including the BSA’s anti-money laundering (AML) and combating the financing of terrorism (CFT) requirements—as well as with U.S. sanctions programs administered by the Office of Foreign Asset Control (OFAC).  

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The SEC’s pursuit of enforcement actions against compliance professionals was one of the most divisive issues of 2015.  Last week, high-ranking officials at the Securities and Exchange Commission (“SEC”) and Department of Justice (“DOJ”) made public comments providing further insight on how they evaluate corporate compliance programs and individuals responsible for those programs, which gave something of a roadmap for how compliance professionals should prepare for investigations. 

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On May 12, 2016, Securities and Exchange Commission (“SEC”) Enforcement Director Andrew Ceresney gave the keynote address at the Securities Enforcement Forum West 2016 in San Francisco. Remarks at the Securities Enforcement Forum West 2016 (May 12, 2016).  In his remarks, Ceresney defended the need for enforcement activity in private equity, reviewed recent prominent actions, addressed common arguments made by subjects of investigations, and argued that recent enforcement activity in the private equity industry had led developments that protected investors. 

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On May 10, Deputy Attorney General Sally Yates spoke out in defense of the so-called “Yates Memo,” a policy statement she issued in September 2015 that announced new policies intended to enhance the Department of Justice’s (“DOJ”) ability to identify and prosecute culpable individuals at all levels in corporate cases. In remarks at the New York City Bar Association White Collar Crime Conference, Yates defended these policies, which largely direct civil and criminal government attorneys to focus on collecting evidence in corporate cases that will lead to the prosecution of individuals, against what she described as predictions of many legal commentators that the policies will cause a “cascading cavalcade of terribles.”

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Perhaps in response to growing skepticism of the purported benefits of self-disclosure, multiple high-level United States government officials have recently reiterated what they contend are the benefits for corporate defendants of self-reporting legal and regulatory violations.  The officials emphasized that voluntary self-disclosure can result in reduced criminal penalties and, among other things, less onerous monitoring requirements.  The officials also took pains to note that failing to self-report could result in higher fines and penalties, though they did not point to specific empirical evidence to back up their assertions. 

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