DOJ Announces Tougher White-Collar Enforcement, Focuses on Individuals in Comprehensive New Policy
On October 28, 2021, Deputy Attorney General Lisa O. Monaco (“DAG Monaco”) announced significant policy changes supporting a renewed focus on corporate crime both as to companies and individuals. These changes rolled back several policies and practices that had been put in place in the Trump Administration and suggest that the Biden Administration will be taking an aggressive approach to white-collar enforcement, including by expecting companies to proactively detect and ferret out wrongdoing. Indeed, DAG Monaco explicitly indicated that companies, long before an investigation begins, should be actively reviewing their compliance programs to ensure they adequately monitor for and remediate misconduct.
Immediate Changes to Corporate Criminal Investigations
DAG Monaco’s speech announced three significant policy changes for DOJ.
Enhanced Reporting Requirements to Receive Cooperation Credit
First, DAG Monaco announced changes to the standards DOJ uses to evaluate whether a corporation should receive cooperation credit. In a corporate investigation, the company’s cooperation with DOJ is a significant factor in DOJ’s determination of whether to file charges, enter into a non-prosecution (“NPA”) or deferred prosecution agreement (“DPA”), or decline to prosecute altogether. Effective immediately, to qualify for cooperation credit, companies must now share with the DOJ all non-privileged information about any individuals involved in or responsible for misconduct, regardless of their position, status, or seniority. This had explicitly been DOJ’s policy from 2015—when it issued the so-called “Yates Memo,” which sought to emphasize the need for individual accountability in connection with corporate wrongdoing—until 2018, when the Trump Administration DOJ tweaked the policy, requiring companies to identify and provide facts about only those individuals “substantially involved” in the misconduct.
DAG Monaco stated the return to the previous policy was necessary because the “substantially involved” standard “afford[ed] companies too much discretion in deciding who should and should not be disclosed to the government” and “ignores the fact that individuals with a peripheral involvement in misconduct may nonetheless have important information to provide to agents and prosecutors.”
Expanded Consideration of Past Misconduct
Second, DAG Monaco announced that DOJ will now evaluate the “full criminal, civil and regulatory record of [a] company” in deciding how to resolve a corporate investigation. DAG Monaco suggested that current practice (if not policy) allows the DOJ’s assessment of wrongdoing to be too siloed–in an FCPA investigation, for example, prosecutors might consider only whether the company engaged in prior FCPA misconduct, and in a tax investigation, prosecutors might only consider whether the company engaged in prior tax-related misconduct. DAG Monaco noted that “[t]aking the broader view of companies’ historical misconduct will harmonize the way we treat corporate and individual criminal histories, as well as ensure that we do not unnecessarily look past important history in evaluating the proper form of resolution.”
Now—despite the fact that, in a large multi-national corporation, a tax investigation may have nothing to do with an FCPA investigation—DAG Monaco has directed prosecutors to “assum[e] all [of the company’s] prior misconduct is relevant” to determine how DOJ will approach resolution of a particular case.
Notably, the new policy will require significant coordination across DOJ and other government agencies, which may slow the pace of corporate resolutions (even as the pace of investigations increases). Depending on the corporation’s history of misconduct, prosecutors may have to coordinate, obtain, and assess information not only from different DOJ components—including, for example, the Criminal, Civil, Tax, and Environment Divisions at Main Justice and the 93 U.S. Attorney’s Offices across the country—but also from regulators like the SEC, as well as from state and even local authorities.
Increased Use of Corporate Monitors to Ensure Compliance
Finally, DAG Monaco announced that DOJ prosecutors may require the use of outside monitors whenever prosecutors believe that it is necessary to ensure that a company will comply with its obligations under an NPA or DPA. Outside monitorships had declined significantly in the Trump Administration. Now, however, DOJ indicated that it will more frequently insist on the imposition of a corporate monitor when a company enters into an NPA or DPA to resolve an investigation. More broadly, the use of monitorships should not be viewed as an exception when a company is the subject or the target of a criminal investigation, and any policies to the contrary, she said, were to be considered as withdrawn by the Department. The DOJ will also study how it selects corporate monitors and consider standardizing its selection process across offices, to eliminate any perception of favoritism.
Areas Under Ongoing DOJ Review
In addition to the three policy changes outlined above, DAG Monaco also announced the DOJ is actively reviewing other areas relating to the investigation of corporate misconduct. In particular, we are likely to see further policy changes in the coming months in the areas described below.
The Use of Pretrial Diversion Agreements for Repeat Offenders
First, the DOJ is actively considering whether and how to differently account for companies that are frequently the focus of DOJ investigations. The DOJ views corporate recidivism as undermining the purpose of pretrial diversion agreements and is weighing when and if an NPA or DPA is suitable for repeat offenders or companies that had previously received an NPA or DPA in lieu of prosecution.
Potential for Heightened Scrutiny of Companies’ Compliance with NPA or DPA Obligations
Further, DAG Monaco stated that DOJ has zero tolerance for corporate non-compliance with obligations under an NPA or DPA. This is particularly true in cases where a company compounds wrongdoing by hiding it from the government, with the Deputy Attorney General declaring that it is “hard . . . to think of more outrageous behavior by a company that has entered into an NPA or DPA . . .” As the Deputy Attorney General highlighted, an NPA or DPA is “not a free pass.” Companies that the DOJ views as in violation of any pre-trial agreement should expect a breach notification, which can be the first step for DOJ resurrecting the charges that had been deferred when the Department entered into the NPA or DPA.
Formation of the Corporate Crime Advisory Group
Finally, Deputy Attorney General Monaco shared that representatives of every part of the DOJ will now be involved in corporate criminal enforcement through a new Corporate Crime Advisory Group. The Advisory Group will have a broad mandate to consult widely on enforcement issues previously discussed, as well as other matters, including potential benchmarks for a company’s successful cooperation. The Advisory Group will also recommend resources to ensure rigorous enforcement and individual accountability. Additionally, the Advisory Group will develop recommendations and propose revisions to DOJ corporate criminal enforcement policies.
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