DOJ Announces 'Fundamental' Changes to Its Corporate Enforcement Policies
The Department of Justice (DOJ) announced “necessary and fundamental revisions” to its policies on corporate criminal investigations and resolutions in an October 28, 2021 departmentwide memorandum that signals a return to and expansion of Obama-era enforcement priorities (the “Monaco Memo”). Author Deputy Attorney General (DAG) Lisa Monaco elaborated on the changes during her keynote address at the American Bar Association’s National Institute Summit on White Collar Crime, identifying three significant changes and emphasizing the importance of effective corporate compliance programs to DOJ’s corporate criminal enforcement policies:
Expansion of Individual Accountability. Restoring prior guidance from 2015, DOJ will deem a company eligible for cooperation credit only if it provides DOJ with all relevant facts relating to all individuals (both inside and outside the company) involved in the misconduct. A company may no longer limit its disclosures to individuals believed to have been only “substantially involved” in the criminal conduct (emphasis added).
Consideration of All Prior Misconduct. When evaluating whether to bring charges against a company, DOJ will take a much broader view of historical misconduct, considering all the company’s prior violations of criminal laws, civil laws, and regulatory rules — regardless of their similarity to the company’s conduct under evaluation.
Use of Corporate Monitors. Rescinding prior DOJ guidance disfavoring imposition of corporate monitors, DOJ will now assess the appropriateness of monitorship on a case-by-case basis and favor monitorship when the need and benefits are clear, as in the case of inadequate corporate compliance programs.
DOJ’s updated guidance on cooperation credit reinstates prior guidance that, to qualify for any cooperation credit, corporations must provide DOJ with all relevant facts relating to all individuals responsible for the misconduct. This “prior guidance” refers to former DAG Sally Yates’ September 9, 2015 memorandum, which set a high bar for corporate cooperation credit. Under the Yates memo, corporations had to identify “all individuals involved in or responsible for the misconduct at issue, regardless of their position, status or seniority” to receive any cooperation credit from DOJ (emphasis added).
The Monaco Memo revives the Yates guidance and displaces former DAG Rod Rosenstein’s November 2018 guidance, which permitted corporations to receive credit for identifying individuals “substantially involved in or responsible for the misconduct at issue” (emphasis added). The Monaco Memo asserts that prosecutors — not companies — can best assess individuals’ relative culpability, noting that even those “less than substantially involved in misconduct” may have important information to provide.
The result is a bright-line rule: “To receive any consideration for cooperation, the company must identify all individuals involved in or responsible for the misconduct at issue” — whether inside or outside the company — and “provide to the Department all nonprivileged information relating to that misconduct.”
DOJ will now also take a broader view of companies’ prior misconduct when considering criminal charges and corporate resolutions. The Monaco Memo instructs prosecutors to “consider all misconduct by the corporation discovered during any prior domestic or foreign criminal, civil, or regulatory enforcement actions against it” — including misconduct by corporate affiliates (emphasis added).
Critically, this analysis is not limited to whether past misconduct is similar to the instant offense. For instance, prosecutors might consider a prior environmental regulatory violation while resolving an antitrust investigation. DOJ’s stated rationale is that a record of even dissimilar misconduct may indicate a lack of adequate internal controls or a corporate culture insufficiently geared toward compliance.
Independent Monitors and the Importance of Corporate Compliance Programs
Finally, the updated guidance shifts DOJ’s position on corporate monitorships. Prior guidance disfavored independent monitors; the new guidance frees prosecutors to impose them as “appropriate.”
“Appropriateness” rests in the eye of the beholder: the guidance simply tells prosecutors to weigh the benefits of monitorship for the company and public against the cost of a monitor and its impact on company operations. But the guidance offers a few instances where monitorship may be appropriate, and it is here that compliance programs take center stage in DOJ’s analysis.
The Monaco Memo states that prosecutors “should favor the imposition of a monitor” where the benefits are clear, such as where a company’s compliance program and controls are “untested,” “inadequately resourced,” or demonstrably “ineffective.” By contrast, the guidance notes that where a company’s compliance programs and controls have been shown to be tested, adequately resourced, and effective by the time of a resolution, a monitor may not be necessary.
As DAG Monaco mentioned during her Miami keynote address, effective corporate compliance programs add value for a company beyond satisfying government standards. Successful compliance programs identify risks and neutralize threats before they materialize, drawing from and evolving with the experience of an organization and its employees over time.