Deciding whether to voluntarily disclose information to the government is difficult. Any guidance from the government as to what it expects from organizations and how it will reward self-disclosures should thus be welcome.
In a recent appearance at a conference on the Foreign Corrupt Practices Act, Deputy Attorney General Rod Rosenstein announced several changes to DOJ’s corporate enforcement policy. Notably, his statements rolled back some of the requirements set forth in the eponymous “Yates Memo” from 2015. In this blog post, we’ll highlight two key policy differences between the Yates Memo and the updated DOJ policy.
First, DOJ is changing how companies may earn credit for cooperating with civil and criminal investigations. The Yates Memo advanced more of an “all or nothing” approach, where companies had to disclose the wrongdoing of all individuals involved in a corruption scheme. Failure to disclose information related to all individuals precluded companies from earning any cooperation credit.
Moving forward, DOJ will apply different standards depending on whether the case involves criminal liability or civil liability. To earn cooperation credit in criminal cases, companies must identify all individuals who were substantially involved in or responsible for the criminal conduct. Companies can receive partial cooperation credit even if they do not identify all relevant individuals or all relevant facts, provided they have made a good faith effort to learn that information. For civil cases, cooperation credit is now on a sliding scale of sorts. Provided that a company “meaningfully assisted” the government, it can receive some cooperation credit. To earn the maximum credit in civil cases, companies must disclose information according to the criminal standard mentioned above (i.e., identify all individuals who were substantially involved in or responsible for the misconduct).
Second, DOJ is changing its procedures for pursuing civil litigation. DOJ civil attorneys have regained some of the discretion the Yates Memo took from them. This discretion includes: 1) negotiating civil releases for people who do not warrant additional investigation in corporate civil settlement agreements; and 2) considering an individual’s ability to pay fines in deciding whether to pursue civil litigation. Rosenstein explained that expanded discretion lets DOJ manage its resources more effectively, allowing lawyers to focus on higher stakes litigation.
Although companies may welcome less burdensome regulatory procedures, Rosenstein cautioned that this policy change should not be mistaken for less rigorous enforcement. Quite the contrary, Rosenstein’s remarks emphasized DOJ’s desire to take commonsense approaches toward balancing their enforcement resources and preventing corruption.
How all of this will play out in practice remains to be seen. In our view, it is fair to say that these changes should be seen as offering companies more options to consider when determining whether to undertake a voluntary self-disclosure, especially in civil enforcement actions. But as always, the extent to which those options avail themselves will depend on how DOJ staff interprets the guidance from leadership.
For now, if you have questions about DOJ’s voluntary self-disclosure policy, or anything else discussed in this blog post, the Venable Team is here to provide further guidance.