Following Deputy AG Lisa Monaco's remarks at the White Collar Conference last year, the Department of Justice created a Corporate Crime Advisory Group to revise DOJ's Corporate Criminal Enforcement Policies. On September 15, 2022, Monaco announced the group's first major round of revisions. The revisions reiterate a focus on individual accountability, voluntary disclosure, and robust compliance programs.
We summarize major takeaways of DOJ's revised policies below.
Voluntary self-disclosure is paramount
On voluntary self-disclosure, Monaco put it plainly: it's "the clearest path for a company to avoid a guilty plea or an indictment." In fact, Monaco stated that, "Absent aggravating factors, the Department will not seek a guilty plea when a company has voluntarily self-disclosed, cooperated, and remediated misconduct."
In line with this ethos, DOJ's revised policies will now require every prosecuting component of DOJ to develop a voluntary self-disclosure program. Monaco also emphasized DOJ's attention to voluntary self-disclosure as a barometer of a company's compliance programming—a nod to DOJ's continued focus on scrutinizing compliance infrastructure.
Companies must identify individual actors
Consistent with recent trends, DOJ's revised policies insist on speedier disclosure of evidence of individual wrongdoing. Monaco stated DOJ expects companies to immediately produce evidence of individual criminal culpability upon discovery, and she noted that delays with document productions will result in the reduction or denial of cooperation credit. Additionally, Monaco stated that DOJ will not sign deferred prosecution agreements (DPAs) or non-prosecution agreements (NPAs) with companies until DOJ has either commenced any relevant individual prosecutions or has developed a full investigative plan and timeline for doing so.
DOJ will consider the age and relevance of past misconduct
Building on last year's remarks, Monaco indicated that, under DOJ's revised policies, not all past misconduct will be treated equally. Instead, DOJ will weigh more heavily any past criminal resolutions in the United States and past wrongdoing involving similar conduct and personnel and accord less weight to dated conduct. Specifically, criminal resolutions occurring more than 10 years before the investigated conduct, or any civil or regulatory resolutions occurring more than 5 years before the investigated conduct, will generally be accorded less weight. DOJ will also assess prior misconduct against similarly situated companies. For example, the history of a company operating in a highly regulated industry will be compared to companies within that same or a similarly regulated industry. Additionally, DPAs and NPAs will require US Attorney or Deputy Attorney General approval for those with a history of misconduct.
Monaco further noted that companies should not be discouraged from acquiring entities with prior compliance issues and explained that, under the revised policies, acquirers may earn significant goodwill if they voluntarily self-disclose and address the causes of the prior issues.
Monitorships will be closely supervised
Monaco stated that DOJ will release new guidance for prosecutors on how to identify the need for a monitor, how to select a monitor, and how to oversee the monitor's work. Under the revised policies, prosecutors will be required to more actively "monitor the monitor," all in an effort to tailor monitorships to the relevant compliance deficiencies.
DOJ has gone back and forth on the costs and benefits of monitorships. Monaco's statements do not suggest a departure from DOJ's view that monitors can be beneficial, but they do suggest monitors will not be afforded untrammeled authority. Both Monaco's statements and the revised policies themselves indicate DOJ's clear preference for a robust compliance program that generates voluntary self-disclosures over a post-hoc monitorship.
Compliance programs must incentivize appropriate conduct
DOJ's revised policies demonstrate that well-designed compliance programs continue to be essential. The new guidance specifically notes that DOJ prosecutors will now evaluate compliance efforts by considering a company's (i) compensation structures and how they incentivize compliant behavior while disincentivizing non-compliance and (ii) use of and policies regarding hard-to-monitor personal devices and/or communications via third-party applications. Monaco emphasized that, under the revised policies, DOJ will specifically look to whether a company's compensation model incentivizes appropriate conduct—e.g., through mechanisms such as compensation "claw backs" for individual wrongdoers. This suggests DOJ will be focused not only on a company's policies, but on what remedial actions a company has taken against any culpable individuals. Notably, this could raise labor and employment considerations and may be more complicated for companies with an international presence.
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DOJ's clear message is that companies must implement robust compliance programs, build compliance into compensation structures, investigate individual culpability, and voluntarily disclose issues to the Government early and often.
This message is consistent with DOJ's focus over the past year, and we have seen similar pronouncements before. It remains to be seen how DOJ will apply these policies, but the revised policies indicate that DOJ is beginning to deploy concrete incentive structures. Navigating DOJ's expectations may aid companies in achieving favorable outcomes, but it also involves a high degree of risk at numerous decision points. Companies and executives should work closely with experienced counsel to ensure they are well-positioned to meet DOJ's expectations while protecting their business interests.