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15 September 20224 minute read

Deputy AG’s remarks on corporate criminal enforcement – key highlights

On September 15, 2022, Deputy Attorney General Lisa O. Monaco (Monaco) delivered remarks on corporate criminal enforcement, highlighting upcoming key changes in the way US Department of Justice (DOJ) prosecutes corporate crime. In her speech, Monaco focused on five upcoming shifts in DOJ’s corporate crime initiatives: (i) individual accountability; (ii) recidivism; (iii) voluntary self-disclosure (VSD); (iv) compliance monitors; and (v) financial compensation.

Individual accountability: reduction (or denial) of cooperation credit for delay in producing evidence

Monaco reiterated DOJ’s priority to go after individuals who commit and profit from corporate crime and to “do more and move faster” in this respect, emphasizing the need to empower prosecutors to expedite investigations of individuals. To that end, DOJ intends to require cooperating companies to come forward with important evidence more quickly and will reduce or deny cooperation credit for an undue or intentional delay in producing information or documents. Going forward, DOJ will expect that cooperating companies will notify prosecutors of “hot documents or evidence,” and disclose all relevant, non-privileged facts to receive cooperation credit. DOJ will work to complete investigations and seek criminal charges against individuals prior to or at the same time as entering a resolution against a corporation.

Recidivism: additional guidance on how DOJ will assess a history of misconduct

Monaco highlighted that “not all instances of prior misconduct are created equal,” and stressed that historical misconduct should be contextualized. Specifically, DOJ will give more weight to prior misconduct that: (i) resulted in criminal resolutions; (ii) involved the same personnel or management as the current misconduct; (iii) occurred less than ten years before the conduct under investigation for criminal resolutions, and less than five years for civil resolutions; and/or (iv) shared the same root cause as the present misconduct.

Monaco also emphasized DOJ’s disfavor of extending multiple successive non prosecution or deferred prosecution agreements with the same company and the Department’s efforts to scrutinize such proposals going forward.

VSDs: expansion of VSD policies to other departments

Monaco expressed the Department’s efforts to expand the existing VSD programs Department-wide, noting that “every Department component that prosecutes corporate crime will have a program that incentivizes voluntary self-disclosure.” She specifically directed those Department components lacking a formal policy to draft one.

Monaco also expressed that “predictability” is critical when self-disclosing, encouraging VSD programs to identify the concrete benefits that a self-disclosing company can expect. She outlined common principles that should apply across all VSD programs, absent aggravating factors, such as: (i) not seeking a guilty plea, assuming the company cooperated and remediated; and (ii) not requiring a compliance monitor, assuming the company implemented and tested an effective compliance program at the time of the resolution.

Independent compliance monitors: increased transparency in monitorships

Monaco previewed the upcoming release of DOJ’s new guidance to prosecutors regarding the need for, selection and oversight of independent compliance monitors. Going forward, monitors will be selected through a consistent, transparent, and documented process tailored to the specific misconduct at issue and related compliance deficiencies of the resolving company.

Financial compensation: using a company’s compensation systems to incentivize compliance

Monaco stressed the importance of promoting a culture of compliance and encouraged companies to: (i) hold financially accountable those individuals who contribute to criminal misconduct; and (ii) build compensation systems that “use affirmative metrics and benchmarks to reward compliance-promoting behavior.”

Monaco directed prosecutors to consider these elements and, specifically, “whether [a company’s] compensation systems reward compliance and impose financial sanctions on employees, executives, or directors whose direct or supervisory actions or omissions contributed to criminal misconduct.” Further guidance from the Criminal Division on how to reward corporations employing clawbacks or similar arrangements is expected by the end of the year.

Key takeaways

Monaco’s speech previews a major update to DOJ’s corporate enforcement policies and sets markers to (i) incentivize companies to come forward through a promise of leniency; and (ii) penalize companies that fail to cooperate timely and/or financially penalize individuals involved in misconduct. Monaco’s final remarks further outline DOJ’s intent to increase corporate enforcement actions in the coming year, previewing a $250 million Congressional budget request to expand its “corporate crime initiative next year.”