SDNY's Revised Voluntary Self-Disclosure Program Offers New Carrots

Executive Summary

• What's new. Federal prosecutors in the Southern District of New York (SDNY) announced changes to their policy encouraging voluntary self-disclosure of violations. Conditional letters of declination will be provided early on, and companies can be credited with self-disclosure even if the information they provide is known to the government, provided the company believes it was not known.
• Why it matters. The earlier issuance of conditional letters of declination will provide companies with greater certainty sooner, and allowing for a company's good faith belief that information is unknown to the government will make self-disclosure more attractive.
• What to do next. Even assuming that the SDNY is suggesting that the forthcoming policy increases the incentives, self-reporting is rarely a simple decision, and companies should be careful to weigh the pros and cons.

The U.S. Attorney's Office in the SDNY will soon roll out a new corporate self-disclosure policy providing companies with the clearest and quickest path to declination of prosecution.

On February 5, 2026, at the Securities Enforcement Forum New York, 2026, Jay Clayton, the U.S. Attorney for SDNY, previewed the new program, which, if adopted as expected, will break new ground in at least two ways:

• The outcome for a company will be clearer at an earlier stage because prosecutors will issue letters of conditional declination close in time to the self-reporting rather than at the conclusion of a long investigation.
• A voluntary self-disclosure based on a good faith belief that information is not known to the government will lead to a declination, even if the information is already known to the government.

Relief Comes at the Beginning, Not the End

The policy is expected to provide clarity of expected outcome to a company shortly following the voluntary self-disclosure rather than at the conclusion of a full investigation, which can often run for years. After an initial assessment, SDNY will provide a company that qualifies with a letter stating that the company will receive a declination so long as it abides by the terms of the letter, including continued cooperation. As U.S. Attorney Clayton stated, companies would be free to publish this early conditional declination to tell the market: "This is a good company."

Credit for a Good Faith Belief That Information Is Unknown to the Government

Under the policy, a voluntary self-disclosure can result in a conditional declination even if the information is not new to SDNY, so long as the company has a good faith belief that the government is not already aware. This is a change from existing government policies that require companies to demonstrate that the information being reported was not already known (or about to be known) by the government. In practice, companies often do not know whether the government is aware of potential misconduct. This change should therefore lessen the risk that a company's self-report will draw attention to the company without a corresponding benefit.

Caveats

While the announcement provided a preview of the key features of the anticipated program, the written policy has yet to be released. Companies and counsel will want to study it closely before taking action. A few questions will be top of mind:

• What crimes are included? The policy is expected to focus on financial fraud, including securities fraud offenses. It is expected that certain crimes will be excluded, such as those where SDNY is required to seek approval from the Department of Justice in Washington, D.C., such as Foreign Corrupt Practices Act cases.
• What factors might disqualify a company? As with existing policies, certain aggravating factors such as terrorism or sex trafficking are expected to be disqualifying aggravating factors.
• What else will companies be required to do? As with existing policies, the forthcoming policy is expected to require continued cooperation, remediation and a pledge to compensate victims. Companies considering self-reporting will need to fully understand the scope of their obligations and weighing whether to self-report.

Key Points

When a company becomes aware of potentially negative facts from a whistleblower or otherwise, the company should promptly investigate to determine whether self-reporting under the forthcoming SDNY policy is in the company's best interest.

For companies considering whether to self-report conduct prior to a full investigation, the forthcoming SDNY policy presents significant incentives for early disclosure. Companies should be mindful, however, that these incentives might drive peers to report early, prompting a broader investigation.

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