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Updated DOJ Corporate Enforcement Policies Emphasize Individual Accountability


In a September 15, 2022 speech, Deputy Attorney General Lisa Monaco announced new Department of Justice guidelines for prosecutors to use when assessing corporate criminality. Although the new guidelines address several issues, the primary focus of the guidelines is on individual accountability. Monaco emphasized at the outset of her speech that “the Department’s number one priority is individual accountability.” The new guidelines represent a clear signal of the Department’s renewed focus on corporate criminality enforcement. The text of Monaco’s speech can be found here, and the September 15, 2022 DOJ memo outlining the new guidelines can be found here.

 

Last fall, as part of an initiative to try to tackle corporate crime, Monaco, in her capacity as Deputy Attorney General, formed a Corporate Crime Advisory Group to review the agency’s corporate enforcement efforts. Monaco formed the advisory group because of a perception that, despite the agency’s priority in targeting individuals that “commit and profit from corporate crime,” the data show an “overall decline in corporate prosecutions over the last decade.” The new guidelines are a product of the advisory group’s efforts and are designed to “empower our prosecutors, to clear impediments in their way, and to expedite our investigations of individuals.”

 

The new guidelines are intended to reiterate and strengthen the agency’s commitment to its “number one priority,” which is to “hold those who break the law accountable, regardless of their position, status, or seniority.” In order to hold individuals accountable, and to do so quickly, the Department will require cooperating companies to promptly provide critical documents and other information. In her speech, Monaco emphasized that “undue or intentional delay” in providing information and documents – “particularly those that show individual culpability” – will “result in reduction of denial of cooperation credit.” Companies seeking cooperation credit “must provide all relevant, non-privileged facts about individual misconduct.”

 

The new guidelines also reflect the Department’s focus on corporate recidivism. The guidelines provide that when prosecutors are deciding the appropriate resolution to a case, they should “consider the full criminal, civil, and regulatory record” of the company. The purpose of this updated guideline is to clarify and standardize how prosecutors should evaluate past corporate misconduct. In her speech, Monaco emphasized that the Department will “disfavor multiple, successive non-prosecution or deferred prosecution agreements with the same company.”

 

As part of the update, the new guidelines also reiterate the importance of voluntary self-disclosure. The clearest path, Monaco said, to avoid a guilty plea or indictment in through voluntary self-disclosure. Self-disclosure is “a sign that the company has developed a compliance program and has fostered a culture to detect misconduct and bring it forward.” The goal of the new guideline is to “reward those companies whose historical investments in compliance enable voluntary self-disclosure.” The new guidelines are intended to “clarify the benefits of promptly coming forward.”

 

Finally, the new guidelines provide new guidance for prosecutorial use of corporate monitors and specify new factors for DOJ assessment of compliance programs, including in particular the extent to which companies are “choosing to reflect corporate values in their compensation systems” through the employment of clawback mechanisms and the use of affirmative metrics and benchmarks to reward “compliance-promoting behavior.”

 

The one additional comment from Monaco’s speech that is most likely to catch the attention of corporate executives and advisors is her statement at the conclusion of her speech that the Department is seeking $250 million for corporate crime initiatives next year.

 

Discussion

Monaco’s statement at the conclusion of her speech about the Department’s intent to seek additional Congressional funding for corporate crime initiatives shows that the new guidelines are not merely window-dressing. The Department is clearly planning a more active role in corporate criminal enforcement. The Department’s renewed commitment to individual accountability is a signal that corporate executives will want to note and that corporate legal advisors should heed.

 

By the same token, the emphasis in the new guidelines on having companies voluntarily self-report and to do so quickly in order to receive cooperation credit is also something that companies and their legal advisors will want to note. The new guidelines should not only help define not only the extent to which companies self-report but also when and how companies should do so.

 

The new guidelines also have important implications about what companies should do now, before problems have arisen. As the Dechert law firm put it its September 20, 2022 memo about the new guidelines (here), the Department’s Memorandum “contains important guidance that companies can and should use now (not later) when assessing existing policies, compensation agreements, and compliance programs to put themselves in the best position possible should they learn about potentially reportable issues in the future.”

 

In particular, companies will want to review their corporate compliance programs and consider whether the programs are properly designed, adequately financed and staffed – and also functioning. Companies will also want to review their compensation schemes to see if they are designed to provide the company with the ammunition to argue that the scheme reflects a culture of compliance.



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