One of the principal responsibilities of the governing board in
the context of a federal regulatory investigation is whether, and
if so to what extent, it should cooperate with the government in
order to demonstrate organizational good faith and reduce the
prospects of defending a criminal or civil complaint. While these
issues were most formally introduced in September, 2015 with the
release of the Yates Memorandum, three separate September public
presentations by senior Department of Justice officials shed
additional light on this important governance topic.
It is well understood that the Yates Memorandum provides clear
incentives for the corporation under investigation to provide the
government with “all relevant facts relating to the
individuals responsible for the (alleged) misconduct.” In
recent comments DOJ Fraud Division Chief Andrew Weissmann warned that the
government is increasingly attentive to potential self-reporting
misconduct;i.e., situations where companies
might make “scapegoats” of lower level employees by
providing the government with evidence regarding their culpability
in order to shield higher level executives from investigation. In a
September 8 presentation, Principal Deputy Assistant Attorney
General David Bitkower commented on the
DOJ’s health care fraud enforcement activity,
including its focus on corporate health care fraud, through a
careful analysis of FCA lawsuits instituted by qui tam
relators. Mr. Bitkower also referenced the use of benchmarking and
other metrics to analyze the effectiveness of corporate compliance
programs and conduct interviews of compliance personnel and other
In addition, in a September 27 presentation, Principal Deputy
Associate Attorney General Bill Baer commented on corporate
cooperation in civil enforcement matters. He
identified several factors that, when present, would contribute to
a company meeting the threshold for cooperation credit. These
include being proactive in terms providing material assistance to
the government across a broad spectrum of elements; being timely in
the provision of such assistance; enabling the government to pursue
conduct it might not otherwise have been able to address; and an
acknowledgment of responsibility, or efforts to help victims of the
relevant company conduct.
Decisions relating to corporate cooperation and the form,
structure and operation of the compliance plan are ultimately those
of the governing board. They are decisions that should be made with
the advice and recommendations of the general counsel and qualified
outside white collar and compliance program legal counsel. These
three new DOJ speeches are relevant to the board’s (and
compliance committee’s) awareness of cooperation and
compliance effectiveness issues.
Allegations of corporate malfeasance may arise in myriad ways: whistleblowers, current or former employees, internal or external auditors, shareholders, the media, regulatory or law enforcement agencies, and/or the plaintiff 's bar.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
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