SDNY To Become Haven For Corporate Declinations Through New Voluntary Self-disclosure Program

On February 24, 2026, the US Attorney's Office for the Southern District of New York (SDNY) announced a revised Corporate Enforcement and Voluntary Self-Disclosure Program for Financial Crimes (the Program), significantly reshaping the incentives for companies confronting potential financial misconduct. The updated framework introduces an expedited, structured pathway to a declination of prosecution. Most notably, eligible companies that promptly self-report and satisfy the Program's requirements may receive a conditional declination within two to three weeks, providing early assurance against criminal prosecution while investigations of individuals continue.

In Depth

The revised Program marks a substantial departure from the US Department of Justice's (DOJ) Corporate Enforcement and Voluntary Self-Disclosure Policy, announced in May 2025. Under that framework, which applied to all US attorney's offices nationwide and may still apply outside of SDNY, outcomes were largely discretionary: Companies that self-reported could receive cooperation credit and potentially avoid a guilty plea, but no formalized or expedited declination mechanism existed. The new Program provides a more defined and front-loaded system that offers speed, greater certainty, and more benefits to disclosing companies. In addition to the two-to-three-week conditional declination timeline (a notably fast commitment to communication about status), the Program expressly eliminates criminal fines, forfeiture, and compliance monitors for qualifying companies. It also expands eligibility by clarifying that senior management involvement, pervasiveness of misconduct, seriousness of the offense, or even prior corporate criminal history do not automatically disqualify a company from receiving a declination. Finally, unlike the prior policy, the Program permits a "timely" self-disclosure even if the government is aware of the misconduct or has received a whistleblower report so long as the company's disclosure is made before the company receives a grand jury subpoena or document request and becomes aware of the investigation by the government.

The revised guidance heightens the consequences of declining to self-report. It establishes a presumption that companies that fail to disclose misconduct and are later investigated will face a guilty plea, deferred prosecution with a monetary penalty, or non-prosecution with a statement of facts and monetary penalty. Taken together, these changes transform SDNY's approach from a flexible cooperation-credit regime into a more rules-based enforcement model with greater certainty that materially increases both the benefits of early disclosure and the risks of remaining silent.

A defined and expedited path to declination

At the core of the revised Program is a structured framework designed to provide companies with clarity and predictability in exchange for early, fulsome cooperation. The Program applies to financial misconduct affecting market integrity, including securities; commodities; digital asset fraud; and fraud such as forgery, embezzlement, misappropriation, and other similar conduct; false statements to auditors or regulators; and willful violations of federal securities laws. Certain aggravating circumstances remain disqualifying, including misconduct involving terrorism, sanctions evasion, foreign corruption, sex trafficking, and other serious criminal activity.

Beyond the type of crime (and lack of aggravating factors), the Program has additional eligibility criteria for companies seeking a declination. To qualify, a company must:

• Voluntarily and promptly self-report misconduct before the issuance of a grand jury subpoena or document request from a law enforcement agency or regulator and before becoming aware of a government investigation
• Fully cooperate, which includes (i) disclosing all non-privileged facts and making documents available for examination – specifically identifying those documents which DOJ might view as most significant and mitigating barriers to document production and inspection such as data privacy laws and blocking statutes – and (ii) using best efforts to make witnesses available for examination, including those that are former employees and located out of the jurisdiction
• Commit to reporting credible evidence of additional criminal conduct for a three-year period
• Undertake appropriate remediation, including making compliance enhancements and taking disciplinary measures
• Pay full restitution to injured parties.

In a notable development, the Program clarifies that certain factors will not automatically disqualify a company from receiving a declination. The involvement of senior management, the pervasiveness of misconduct within the organization, the seriousness of the offense, or even prior criminal history of the entity do not, standing alone, constitute disqualifying aggravating circumstances. This represents a significant expansion of potential eligibility compared to prior enforcement approaches and voluntary self-disclosure policies still in force at other DOJ components around the United States.

Speed and certainty

If a company is eligible, a central feature of the revised Program is its accelerated timeline for a conditional declination of prosecution. Historically, corporate investigations could take years to resolve, and companies would be expected to fully cooperate during that indefinite period to obtain a declination after the investigation concluded. Under the new framework, qualifying companies may receive a conditional declination letter within two to three weeks of self-reporting. That initial declination indication provides a defined and agreed-upon path to a final declination, contingent on continued cooperation, remediation, and restitution. It also provides a mechanism for companies to achieve certainty and ensure they will still receive a declination if they meet the conditions despite a change in leadership. For boards and management, this accelerated process significantly increases the importance of rapid internal assessment and decision-making.

Elimination of fines and monitors for qualifying companies

The Program reduces potential financial and operational burdens for self-reporting companies. SDNY states that it will not seek criminal fines or forfeiture from companies that qualify under the Program; restitution to injured parties will be the only financial component of a resolution, although that can be significant. Additionally, qualifying companies will not be required to retain an independent compliance monitor, which is consistent with DOJ's overall movement away from monitors. The elimination of penalties and monitorship meaningfully lowers the costs traditionally associated with corporate resolutions and may influence disclosure decisions.

Heightened risks for non-disclosure

The Program underscores the consequences of declining to self-report. If a company identifies misconduct but chooses not to disclose it and the government later uncovers the conduct, the Program establishes a presumption that any resolution will take the form of a guilty plea or a Deferred Prosecution or Non-Prosecution Agreement with a statement of facts accompanied by financial penalties. The updated guidance also signals that a failure to report may be viewed as inconsistent with fiduciary obligations, language that may have implications for prosecutorial discretion and potential shareholder scrutiny.

Practical considerations for companies

The revised Program notably alters the calculus surrounding voluntary self-disclosure in SDNY and positions SDNY as an increasingly favorable jurisdiction for companies considering whether to self-report uncovered misconduct. In light of the new guidance, companies should take time to evaluate their existing compliance regimes to determine:

• Whether existing internal investigation protocols allow for rapid internal fact development sufficient to evaluate disclosure within a compressed timeframe
• Whether compliance programs and escalation procedures are designed to identify and address potential financial misconduct promptly
• Whether the reporting chain for whistleblower reports permits for timely review and evaluation for potential disclosure
• How boards and management document deliberations regarding disclosure decisions.

Conclusion

The updated Program replaces a more discretionary cooperation-credit model with a faster, more structured, and more consequential regime. Companies that are prepared to act quickly may benefit from unprecedented certainty and reduced penalties while those that delay or decline to report face heightened enforcement risk. Boards and management should revisit their disclosure protocols and crisis-response procedures to ensure they are aligned with this new enforcement landscape.

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