At his confirmation hearing earlier this year, Attorney General Merrick Garland identified the policing of corporate crime and enforcement as a key priority of the Biden administration. In an address at the ABA’s recent National Institute on White Collar Crime, Deputy Attorney General Lisa Monaco announced three significant actions to strengthen the Department of Justice’s (DOJ) corporate criminal enforcement policies and practices. The DOJ memo provides prosecutors with a new, or at least sharpened, set of tools to effectuate DOJ policy. For companies and corporate officers, especially those in heavily-regulated industries, the DOJ’s renewed focus warrants a review of internal compliance programs and procedures.
Evaluating History of Misconduct
When evaluating a company’s compliance history, the policy clarifies that prosecutors are to consider the entirety of the entity’s regulatory and criminal enforcement record, not simply the misconduct at issue. Prosecutors are encouraged to “start from the position that all prior misconduct is potentially relevant,” and therefore broaden their information sweep. This includes any prior criminal, civil, or regulatory enforcement actions, regardless of how it might relate, or not, to the subject of the present investigation. Organizationally, it also includes the target company’s parent, divisions, affiliates, subsidiaries, and other entities within the corporate family. Especially for large companies and multi-national corporations, this broad scope of review could result in a greater focus on the target’s past misconduct, even if unrelated to the conduct at issue.
Identifying All Individuals
Obtaining credit for cooperating with the authorities can influence, or even determine, the outcome of a prosecution determination. The DOJ has clarified that, in order to qualify for any cooperation credit, “corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct.” This means producing “all nonprivileged information relevant to all individuals involved in the misconduct,” both inside and outside of the company. The new policy takes a broad view of “involved” and effectively removes the company’s discretion in determining which individuals to disclose to the government. Even in the case of a rogue employee falsifying records, the company will be expected to disclose the identity of co-workers, supervisors, and managers, regardless of position or potential culpability.
Using Corporate Monitors
The DOJ has pivoted away from prior policies critical of corporate monitors and has recommitted to imposing monitors where appropriate in corporate criminal matters. While still evaluated on a case-by-case basis, the DOJ will favor the imposition of a third-party monitor where a company’s compliance program has proven ineffective, untested, or inadequately funded. According to the DOJ, monitors can be “an effective means of reducing the risk of repeat misconduct and compliance lapses.” Independent monitors can also be a costly addition to a resolution of a government investigation.