United States: DOJ Announces New Policies Targeting Corporate White Collar Crime

Deputy Attorney General Lisa O. Monaco recently announced new policies targeting corporate white collar crime and reversing Trump-era guidelines deemed too lenient by the current leadership at the U.S. Department of Justice ("DOJ"). In an October 28, 2021 address to the American Bar Association's National Institute on White Collar Crime, Monaco announced that companies considering cooperating in DOJ investigations must be prepared to identify all individuals involved in suspected misconduct and produce all non-privileged information about their involvement. Monaco also announced tough new standards relating to companies' prior misconduct and the use of corporate monitors. Companies should review their current ethics and compliance programs, and consider updating them in light of these new policies and current trends in white collar crime enforcement.

Return to Aggressive Corporate Cooperation Policy

Monaco announced a return to an aggressive Obama-era cooperation standard that had been partially rescinded by the Trump Administration. On September 9, 2015, then-Deputy Attorney General Sally Yates issued a policy memorandum seeking to strengthen DOJ's pursuit of individual corporate wrongdoing. The Yates Memo directed DOJ attorneys to focus on individuals from the inception of investigations. To be eligible for any cooperation credit in criminal and civil investigations, companies were required to provide DOJ all relevant facts about individuals involved in corporate misconduct. Absent extraordinary circumstances, no corporate resolution would provide protection from criminal or civil liability for any individuals, and corporate cases could not be resolved without a "clear plan" to resolve related individual cases.¹

The Trump Administration softened DOJ's corporate cooperation standard. On November 29, 2018, Deputy Attorney General Rod Rosenstein revised the Yates Memo. Under the DOJ's revised criminal cooperation credit policy, companies seeking cooperation credit in criminal cases were still required to identify culpable individuals, but they needed only identify individuals who were substantially involved in or responsible for criminal conduct. Investigations would no longer be delayed merely to collect information about individuals whose involvement was not substantial and who were not likely to be prosecuted. The Yates Memo was revised on the grounds that the prior policy of requiring companies to identify every employee who played any role in the misconduct often impeded resolutions and wasted resources.²

In her speech to the ABA, Monaco reversed the "substantial involvement" standard for corporate cooperation credit. For companies to be eligible for any cooperation credit, they must provide DOJ with all non-privileged information about individuals involved in or responsible for the misconduct at issue. Companies now must identify all individuals involved in the misconduct, regardless of their position, status or seniority.³

Other Significant Changes to Corporate Enforcement Policies

In her ABA speech, Monaco also announced new guidance to prosecutors regarding what historical misconduct should be evaluated when considering corporate resolutions, including an amendment to Justice Manual's Principles of Federal Prosecution of Business Organizations. Going forward, DOJ prosecutors will undertake a broader review of prior corporate misconduct. DOJ now will consider the "full criminal, civil and regulatory record of any company when deciding what resolution is appropriate for a company that is the subject or target of a criminal investigation".⁴ Prosecutors must take a department-wide view of past misconduct and not just limit their review to misconduct within the purview of their specific division.

Monaco announced that DOJ will carefully review existing corporate non-prosecution agreements (NPAs) and deferred prosecution agreements (DPAs) to ensure ongoing compliance, noting that these agreements are not a "free pass" for companies who have benefitted from pre-trial diversion programs. Responding to the reduction in corporate monitorships during the Trump Administration, Monaco also made clear in her ABA speech that DOJ is "free to require the imposition of independent monitors whenever it is appropriate to do so in order to satisfy our prosecutors that a company is living up to its compliance and disclosure obligations under the DPA or NPA."⁵ "Where they do not live up to their obligations, we will hold them accountable," Monaco later said in an interview on Bloomberg Television.⁶

These new corporate enforcement policies follow an announcement earlier this year imparting more discretion to DOJ field offices. On January 29, 2021, DOJ rescinded a Trump-era directive limiting federal prosecutors' discretion by requiring them to charge defendants with the most serious provable offense or, alternatively, seek supervisory approval to charge a less serious offense and seek a lesser sentence. In place of the Trump-era directive, the Biden Administration reinstated an Obama-era policy, which had expanded prosecutorial discretion, stating:"Decisions about charging, plea agreements, and advocacy at sentencing are based on the merits of each case and reflect an individualized assessment of relevant facts."⁷

DOJ Corporate Crime Advisory Group

DOJ has formed an intra-agency Corporate Crime Advisory Group, which will be made up of representatives from every part of DOJ involved in corporate criminal enforcement. This group will have a broad mandate. It will consider issues including recidivism and non-compliance with prior NPAs and DPAs - as well as other issues, such as using independent monitors and which benchmarks should be considered to measure a successful company's cooperation. It will also make recommendations on what resources can assist more rigorous enforcement, and how to ensure that individual accountability is prioritized. The advisory group will then develop recommendations and propose revisions to the DOJ's policies on corporate criminal enforcement.

Implications for Companies

In her speech, Monaco characterized the new DOJ approach as "a start-and not the end-of the administration's actions to better combat corporate crimes."⁸ Companies should familiarize themselves with these new DOJ white collar enforcement guidelines and be on the lookout for new policies emerging from DOJ's Corporate Crime Advisory Group. As compliance guidelines evolve, companies should review and revise their programs and implement contemporary compliance training. Companies considering cooperating with the government should be prepared to identify all individuals involved in the misconduct (not just those substantially involved) and produce all non-privileged information about their involvement. Companies facing investigations should bear in mind that DOJ now will review their whole criminal, civil and regulatory record, not just similar past enforcement matters. Companies should also be on notice that this approach will likely extend beyond the DOJ. On November 4, 2021, Gary Gensler, Chairman of the Securities and Exchange Commission ("SEC"), endorsed the DOJ's approach, calling it "broadly consistent with his view of how to handle corporate offenders."⁹

The impact of these new policies remains to be seen; some companies may take their time in evaluating how to respond to Monaco's announcement. At least one commentator has noted that the new policies could actually create disincentives for companies to self-report corporate wrongdoing, which would be the opposite of what the Biden Administration wants to accomplish.¹⁰ But companies placing a premium on proactive compliance should use this announcement as an opportunity to re-evaluate and buttress their ethics and compliance programs. In the words of Deputy Attorney General Monaco, "companies need to actively review their compliance programs to ensure they adequately monitor for and remediate misconduct - or else it's going to cost them down the line".¹¹

JMBM's White Collar Defense & Investigations Group is keenly focused on our clients' business objectives and is committed to minimizing the disruption, anxiety, and public scrutiny that can arise from criminal and civil investigations and litigation. We are leaders in the representation of companies, boards of directors, management, and individuals in connection with a broad range of government investigations, enforcement actions, remediation and compliance, administrative proceedings, internal investigations and white collar criminal investigations and prosecutions.

Footnotes

1 Memorandum from Deputy Att'y. Gen. Sally Q. Yates to Assistant Att'y. Gens., Dir. FBI, Dir. Exec. Off. U.S., and all U.S. Att'ys. 2 (Sept. 9, 2015) (hereinafter the "Yates Memo").

2 Deputy Att'y. Gen. Rod J. Rosenstein, Remarks at the American Conference Institute's 35th International Conference on the Foreign Corrupt Practices Act, Justice.gov (Nov. 29, 2018).

3 Deputy Att'y. Gen. Lisa O. Monaco, Keynote Address at the ABA's 36th National Institute on White Collar Crime, Justice.gov (Oct. 28, 2021).

4 Id.

5 Id.

6 Chris Strohm, DOJ Deputy Vows Corporate Crime Crackdown on More People, Bloomberg (Oct. 28, 2021).

7 See also Memorandum from Deputy Att'y. Gen. Eric H. Holder, Jr. to all Fed. Prosecutors 1 (May 19, 2010) ("Decisions regarding charging, plea agreements, and advocacy at sentencing must be made on the merits of each case, taking into account an individualized assessment of the defendant's conduct.").

8 Remarks of Deputy Atty. Gen. Lisa. O. Monaco, supra, note 3.

9 Gary Gensler, Prepared Remarks At the Securities Enforcement Forum, U.S. Securities and Exchange Commission (Nov. 4, 2021).

10 Sandra Moser, et al., New DOJ Corporate Crime Approach May Deter Self-Reporting, Law360 (Nov. 2, 2021).

11 Remarks of Deputy Atty. Gen. Lisa. O. Monaco, supra, note 3.

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