The United States Department of Justice (DOJ) recently announced a nationwide policy that gives credits for companies that make “voluntary self-disclosures” for corporate misconduct. The policy builds on changes to DOJ’s Corporate Enforcement Policy that was announced in January.
The U.S. Attorneys’ Offices’ (USAO) Voluntary Self-Disclosure Policy, which was prepared by a Corporate Criminal Enforcement Policy Working Group consisting of U.S. Attorneys from various districts across the country, sets forth the standard for defining and crediting such disclosures. The goal of this policy is to emphasize individual accountability and quick case resolution, while also providing transparency and predictability for the reporting companies. To constitute a “voluntary self-disclosure” under the new policy, each of the following requirements must be met: the disclosure must (1) be made voluntarily and not pursuant to preexisting obligations; (2) be made before the misconduct is publicly reported or otherwise known to the DOJ, prior to an imminent threat of disclosure or government investigation, and within a “reasonably prompt” time after the company becomes aware of the misconduct; and (3) include all relevant facts and be accompanied by certain actions. Understanding that a company may not have all the relevant facts at the time of disclosure, the policy advises that a company should make clear that the disclosure is based on a preliminary investigation or assessment of information with the expectation that the company acts quickly to preserve and produce all relevant information and provide updates to the USAO.
The policy outlines significant benefits in the event of company misconduct and a subsequent disclosure that meets the policy’s requirements. First, absent “aggravating factors,” the USAO will not seek a guilty plea as long as all criteria[1] are met, and secondly, the USAO can choose not to pursue criminal penalties. Even if a USAO feels a criminal penalty is necessary, it will not impose a penalty greater than 50% below the low end of the U.S. Sentencing Guidelines. Finally, the USAO will not require the imposition of an independent compliance monitor if the company can show it has implemented and tested an effective compliance program.
The new policy is an important tool that companies can utilize when considering how to handle situations involving corporate misconduct. It is noted, however, that although this new policy sets out the criteria for voluntary self-disclosures and resulting incentives for these disclosures, the DOJ and individual USAOs maintain considerable discretion in determining whether the disclosure requirements were met and the consequences that disclosing companies face. As such, it is prudent for companies to consult counsel immediately upon learning of any potential misconduct that could trigger the self-disclosure policy.
[1] The USAO will not seek a guilty plea where a company has (a) voluntarily self-disclosed in accordance with the criteria set forth above, (b) fully cooperated, and (c) timely and appropriately remediated the criminal conduct.
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