United States: Foreign Investors Active In The U.S. – Stricter Enforcement Of Criminal Laws Against Senior Management And Ways To Stay Clean For Investors


Increased Prosecution of Company Executives. Company boards and management should take note of the U.S. Department of Justice's increasing focus on the prosecution of individual executives and employees for unlawful corporate conduct. As a result of the DOJ's new policy, described in a memorandum from Deputy Attorney General Sally Yates (the "Yates Memorandum"),1 company senior management faces increased exposure to U.S. criminal prosecution and civil claims for antitrust violations, corruption, market manipulation, and corporate fraud. As the Deputy Attorney General of the Department of Justice has stated, "it is our obligation at the Justice Department to ensure that we are holding lawbreakers accountable regardless of whether they commit their crimes on the street corner or in the boardroom. In the white-collar context, that means pursuing not just corporate entities, but also the individuals through which these corporations act."2 Company executives need to be cognizant of the risk that individual employees may be prosecuted for misconduct that they "condoned, directed or participated in."3

Full Disclosure on Individuals. The Yates Memorandum also makes clear that corporations will not be eligible for any cooperation credit in criminal or civil investigations unless they provide the DOJ with all relevant facts relating to all individuals involved in the corporate misconduct, regardless of the level of seniority.4

Extradition Powers. U.S. prosecutors are using their extradition powers to bring culpable foreign nationals to the U.S. to face prosecution and serve jail time. In 2014, Romano Pisciotti, an Italian national, was extradited from Germany on a charge of participating in a conspiracy to rig bids, fix prices, and allocate markets for marine hose in the U.S. and elsewhere. Mr. Pisciotti pled guilty and was sentenced to serve two years in U.S. prison for his participation in the conspiracy. As Brent Snyder, the DOJ Antitrust Division's Deputy Assistant Attorney General for criminal antitrust enforcement recently noted, "[t]he Antitrust Division is not only successfully prosecuting more individuals, at higher levels within their firms, but is also obtaining longer prison sentences."5


Transaction Reviews Can Trigger Criminal Prosecution. The renewed emphasis on holding individual executives accountable for corporate misconduct also has significant implications for mergers and acquisitions involving companies doing business in the U.S. Company management should be aware that the U.S. antitrust review process gives regulators extensive access to internal company documents and information. It is not uncommon for regulators to detect corporate misconduct in the course of their antitrust review. If the regulators find evidence of anticompetitive conduct, this could derail the deal and trigger both criminal investigations of the companies as well as follow on private class actions.

In a recent example, Chicken of the Sea International and Bumble Bee Foods announced plans to merge in 2014. The U.S. DOJ's investigation of the transaction reportedly revealed a price-fixing scheme involving the merging parties. As a result, the companies were forced to abandon the deal in December 2015. Not only did their proposed merger fail, but these companies are now facing criminal prosecution in the U.S. and defending numerous private class actions seeking treble damages for their cartel activities.

Commercial Agreements. Even without a corporate presence in the U.S., senior management of market participants with significant business in the U.S. – including through an agent, distribution, or cooperation agreement – cannot simply escape the grip of U.S. prosecution if their commercial conduct violates U.S. antitrust laws.


Implications for M&A Due Diligence. The increased law enforcement underscores the need for corporate management to undertake thorough and sophisticated due diligence and risk assessments when contemplating potential acquisitions of companies that do business in the U.S. Failure to identify corporate misconduct or potential compliance gaps opens the door to potential future prosecutions, which can undermine the core value of the business being acquired.

Effective due diligence should go beyond the traditional areas and involve a risk assessment of the target and the markets the target participates in. This can mean an evaluation of (i) market structures (concentrated markets, structural and commercial links between competitors, role of trade associations, etc.), (ii) market dynamics (stable market shares, bidding markets, cost- and price pressures, degree of innovation, etc.), (iii) products, as well as (iv) "criminal history" of the markets, ongoing investigations and current compliance practices.

When risk areas are detected, due diligence reviews should include interviews with senior management. While such interviews should be cooperative and take place in the context of the transaction, outside counsel familiar with the relevant regulatory laws should participate in such interviews.

While targeted compliance guarantees in the relevant agreements (SPAs, Joint Venture Agreements, commercial agreements, etc.) cannot fully avoid the risk of criminal enforcement, documenting such responsibilities will prove valuable if any civil litigation results.

After the Deal Closes or Joint Venture is Approved. It is important to maintain a close look at the acquired or partner company's operations and compliance practices, including regular compliance trainings and audits, to ensure that there is no unlawful conduct taking place. Problem Detected. In the event that corporate misconduct is detected, company management must promptly put an end to the conduct and consider the benefits and risks of self-disclosure to the relevant authority and applying for immunity in the case of cartel conduct. In the U.S., as well as many other jurisdictions around the world, a corporation and cooperating employees can avoid criminal conviction, prison terms, and fines by being the first to come forward with information regarding its participation in a criminal antitrust violation and fully cooperating with the Antitrust Division. While there is no leniency program in the U.S. for corruption, there are "tangible benefits"6 for companies that voluntarily disclose Foreign Corrupt Practices Act violations and cooperate with the DOJ's investigation.


Given the significant implications of the increasing enforcement of criminal law when engaging in business in the U.S., company management should approach such transactions with the expectation of conducting heightened due diligence and procuring sophisticated guidance. It is not only the corporation, but also individuals in corporate management, who bear the risks.


1 Memorandum from Deputy Attorney General Sally Quillian Yates to the Assistant Attorney General, Antitrust Division, et al., Individual Accountability for Corporate Wrongdoing (Sept. 9, 2015) [hereinafter Yates Memo], available at http://www.justice.gov/dag/file/769036/download.

2 Sally Quillian Yates, Deputy Attorney General, Remarks at New York University School of Law Announcing New Policy on Individual Liability in Matters of Corporate Wrongdoing (Sept. 10, 2015) (emphasis added), available at http://www.justice.gov/opa/speech/deputy-attorneygeneral-sally-quillian-yates-delivers-remarks-new-york-university-school.

3 Brent Snyder, Deputy Assistant Attorney General, Department of Justice, Antitrust Division, Remarks at the Yale Global Antitrust Enforcement Conference: Individual Accountability for Antitrust Crimes (Feb. 19, 2016) [hereinafter Snyder Remarks], transcript available at http://www.justice.gov/opa/speech/deputy-assistant-attorney-general-brent-snyder-deliversremarks-yale-global-antitrust.  ("We are also undertaking a more comprehensive review of the organizational structure of culpable companies to ensure that we are identifying and investigating all senior executives who potentially condoned, directed, or participated in the criminal conduct.").

4 See Yates Memo at 3.

5 Snyder Remarks, supra note 3.

6 Alice Fisher, Assistant Attorney General, Department of Justice, Remarks at the American Bar Association National Institute on the Foreign Corrupt Practices Act (Oct. 16, 2006), available at http://www.justice.gov/sites/default/files/criminal-fraud/legacy/2010/04/11/10-16-06AAGFCPASpeech.pdf.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.