DOJ Announces Updated Guidance on Corporate Criminal Enforcement


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Eye on Enforcement

On September 15, Deputy Attorney General Lisa Monaco announced revisions to the Department of Justice’s corporate criminal enforcement policies. In her speech at New York University and subsequent memorandum (the “Monaco Memo”), Monaco outlined this updated guidance, which focused on individual accountability, prior misconduct, voluntary self-disclosures, monitorships, and compensation structures that promote compliance.

Overview and Takeaways

  • The Monaco Memo continues DOJ’s carrot and stick approach to corporate criminal misconduct, encouraging companies to use compliance, financial, and other tools to root out malfeasance and emphasizing the importance of self-disclosure and individual accountability.
  • The Monaco Memo places increased emphasis on companies timely disclosing individuals connected with corporate misconduct to receive cooperation credit. This hearkens back to earlier DOJ policy from 2015 (the Yates Memo), which requires companies to identify all individuals connected to misconduct, regardless of the significance of their role. The new emphasis on speed will force companies to respond to and investigate allegations more quickly and potentially make disclosures to DOJ before investigations are fully complete.
  • Past misconduct still factors into prosecutorial decisions, but issues that arose longer ago — five years for civil and regulatory issues and 10 years for criminal matters — are accorded less weight. In addition, companies that acquire companies with historical misconduct can avoid being tarnished by ensuring the acquired company is integrated into an appropriate compliance program and the past misconduct has been remediated.
  • Voluntary self-disclosure is the surest way to avoid criminal charges. Reflecting this policy, the Monaco Memo directs all components of DOJ to develop their own specific policies around voluntary self-disclosure.
  • Prosecutors will examine how a company has structured its compensation in assessing its compliance program, including whether financial penalties exist for misconduct and financial incentives are offered for pro-compliance disclosures.
  • The Monaco Memo sets out new criteria for determining when corporate monitors are appropriate and, likewise, instructs DOJ components to develop policies for selecting and overseeing monitors.

Individual Accountability

Monaco began with what she indicated is the “top priority” for DOJ corporate criminal enforcement — individual accountability. Monaco stated that cooperating companies are required to disclose evidence without delay in order to expedite investigations. She emphasized that “hot” documents and evidence should immediately be brought to the attention of prosecutors and that gamesmanship will not be tolerated. In an effort to push corporations to be more transparent, Monaco stated that failure to timely turn over critical, non-privileged evidence could result in reduced or eliminated eligibility for cooperation credit.

History of Misconduct

Monaco announced an increased effort to contextualize historical misconduct. While the DOJ will consider a range of factors involving prior misconduct, including the form, the associated sanctions, the date, and the underlying conduct, Monaco emphasized that the greatest weight will be given to recent criminal resolutions and also criminal resolutions involving the same personnel. Less weight will be given to “dated conduct,” which Monaco defined as violations that occurred more than 10 years before the conduct currently under investigation, and civil or regulatory resolutions that took place more than five years before the current conduct.

The DOJ will also be mindful when comparing corporate track records of misconduct. Monaco noted that corporations will be compared to similarly situated corporations. For instance, if a corporation operates in a highly regulated industry, its history should be compared to others similarly situated, to determine if the company is an outlier. She also emphasized that corporations should not be discouraged from acquisitions involving companies with a riddled track record. These companies will not be treated as recidivist as long as the acquired company was integrated into the acquiring company’s “well-designed compliance program” and the underlying misconduct was addressed.

Additionally, Monaco announced that the DOJ disfavors multiple, successive non-prosecution or deferred prosecution agreements with the same company.

Voluntary Self-Disclosure

To incentivize companies to voluntarily disclose misconduct to the government, Monaco clarified that voluntary self-disclosure is paramount. She announced that all DOJ components that prosecute corporate crime will be required to clearly outline expectations of what self-disclosure entails and to identify concrete benefits to self-disclosure. Importantly, absent aggravating factors, the Monaco Memo instructs DOJ components to forgo seeking a guilty plea where a corporation has voluntarily self-disclosed, fully cooperated, and timely remediated criminal conduct.

Compliance Monitors

Monaco announced that the DOJ will be addressing concerns about monitors by releasing new guidance for how prosecutors should identify the need for a monitor, how to select a monitor, and how to oversee the monitor’s work. She stated that monitors will now be selected pursuant to a documented and transparent selection process. Monaco also noted the importance of “monitor[ing] the monitor.” In an effort to do so, the DOJ will receive regular updates to ensure the monitor stays on task.

Corporate Culture of Compliance

Monaco stated the need for compliance to be integrated into corporate culture. Monaco announced that when prosecutors are evaluating a company’s compliance strength, they will consider whether the company’s compensation structure incentivizes employee behavior. Specifically, Monaco noted that prosecutors will look at whether a company employs clawback provisions, partial escrow of compensation, or similar arrangements that retroactively discipline behavior. Prosecutors will also look to see if affirmative incentives, including compliance metrics and benchmarks are in place. Lastly, Monaco clarified that these compensation structures should not just be written into corporate policies, but rather they should actually be implemented into practice in order to be seriously considered by prosecutors.