Deputy Attorney General Lisa Monaco Announces New Policies on Corporate Criminal Repression | Kramer Levin Naftalis & Frankel LLP

New Policies Emphasize the Benefits of Voluntary Self-Disclosure and Clarify How a Company’s Misconduct History Is Considered in Disposition Decisions

On September 15, 2022, Assistant Attorney General Lisa Monaco spoke at New York University Law School, outlining the priorities and policies of the US Department of Justice (DOJ) on corporate criminal law enforcement. .

His speech built on his October 2021 announcement of the DOJ’s top corporate crime priorities, which highlighted the need for prompt and voluntary cooperation and detailed the benefits of voluntary disclosures. The speech was the culmination of a year-long work by a DOJ advisory group reviewing companies’ enforcement efforts and receiving feedback from academics, lawyers and compliance officers.

Voluntary self-disclosure

In his speech, Deputy AG Monaco highlighted the DOJ’s policy of rewarding companies that voluntarily disclose misconduct to the government. She said that going forward, every division of the DOJ that prosecutes corporate crimes should now have a program that encourages voluntary self-disclosure, provides clear expectations about what self-disclosure actually entails, and identifies the concrete benefits of self-disclosure.

These tangible benefits include that the DOJ does not seek to plead guilty or seek indictment when a company has self-reported, cooperated, and remedied the misconduct, and the DOJ does not require a independent compliance monitor whether a company has also implemented and tested an effective compliance program.

In addition to voluntary self-disclosure, Deputy AG Monaco discussed corporate compliance programs. When evaluating a company’s compliance program, prosecutors will consider whether the company’s compensation systems reward compliance or impose financial penalties on employees whose actions have contributed to criminal conduct and whether, after taking knowledge of misconduct, a company actually recovers compensation or imposes financial penalties. She said the DOJ will issue new guidance on the additional benefits of clawbacks or other similar compliance agreements.

Deputy AG Monaco warned that any company that intentionally delays the production of relevant documents or information will receive a reduced or potentially zero cooperation credit. She warned that a company’s first reaction when it discovers hot or relevant documents should be to notify prosecutors.

Deputy AG Monaco also said DOJ prosecutors will work to complete investigations and seek any justified criminal charges against individuals before or at the same time they issue a resolution against the company.

History of misconduct

Consistent with its October 2021 announcement that the DOJ would take a more holistic view of a company’s enforcement history, the Deputy AG of Monaco discussed the DOJ issuing additional guidance on how a company’s history of misconduct will be assessed when deciding an appropriate resolution. She reiterated the DOJ’s commitment to considering a company’s full criminal, civil, and regulatory history when resolving, but said older behaviors would be given less weight. Penal resolutions made more than 10 years ago and civil or regulatory resolutions made more than five years ago will be considered dated. Prior misconduct that occurred in the United States as well as misconduct involving the same personnel or management will, in turn, be given greater weight.

Deputy AG Monaco also explained how the DOJ will review the nature and circumstances of prior misconduct, including whether it shared the same root causes as the misconduct under investigation.

She said the DOJ would discriminate against multiple successive non-prosecution agreements (NPAs) or deferred prosecution agreements (DPAs) with the same company, making it more likely that repeat offenders will be criminally charged.

In light of these new guidelines, companies with a history of misconduct should be willing to address their story and be prepared to distinguish it from the conduct under investigation.

However, Deputy AG Monaco said the DOJ will not penalize or treat companies as repeat offenders when acquiring companies with a history of compliance issues as long as those issues are resolved quickly. Thus, companies need to perform prompt due diligence on acquisitions and quickly address any potential compliance issues.

Monitors

Deputy AG Monaco also explained how the DOJ will deal with independent compliance monitors. She said the DOJ would issue new guidance for prosecutors on how to identify the need for a monitor, how to select a monitor, and how to supervise the work of the monitor. She emphasized that all monitor selections will now be made in accordance with a transparent and consistent process. The DOJ will also now ensure that the scope of each monitor is appropriately matched to the alleged misconduct.

While some of the comments from Deputy AG Monaco reiterated prior guidance, to the extent that the DOJ is able to provide greater transparency as to the benefits that will be granted to cooperation and the arrangements it will seek, it is a welcome development. In response, and in order to realize these benefits, companies will need to continue to invest in compliance and develop policies that will help them make timely voluntary disclosures where appropriate. Companies should also carefully monitor upcoming DOJ guidance to see how each division implements these changes. His comments also underscore the DOJ’s emphasis on aggressively prosecuting individuals and its intention to expedite such investigations.

The full speech can be found hereand the accompanying DOJ memorandum detailing the policy revisions can be found here.

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