Deputy Attorney General Lisa Monaco (“DAG”) delivered the keynote address at the ABA’s 36th Annual Institute on White Collar Crime on October 28th. The speech emphasized priorities that existed prior to the Trump Administration. The DAG explained that corporate crime has taken on a national security dimension, with data analytics playing a larger role. Criminals now regularly use technology and financial industry gaps to exploit the investing public. Yet, despite the methods used to commit crime, the DOJ will continue to focus on individual accountability for those who break the law, thereby promoting respect for laws and regulations designed to protect investors, consumers and employees. Prosecutors will adhere to the Justice Department Manual and the Principles of Federal Prosecution and press forward with prosecution when sufficient admissible evidence demonstrates that a federal offense has occurred. Finally, DOJ will enhance resources to prosecutors, thereby increasing the likelihood of more effective white-collar prosecutions.
The DAG identified DOJ’s priorities, including as follows:
- Full Disclosure of Non-Privilege Information Needed to Receive Cooperation Credit. DOJ has restored prior guidance to clarify that to be eligible for cooperation credit, companies must provide all non-privileged information about individuals involved in, or responsible for, the misconduct. Companies must identify all individuals involved in the misconduct, regardless of their position, status or seniority. The DAG explained that even individuals with peripheral involvement in misconduct could be important to investigators and prosecutors, given that DOJ’s prosecutors are better positioned to evaluate the relevance and culpability of individual misconduct. Accordingly, DOJ will not look favorably on companies that disclose only those who are “substantially involved” in the misconduct, rather than identifying all such individuals, as well as providing all non-privileged information. The DAG rebutted anticipated arguments that individuals not central to the misconduct will not be in jeopardy and noted that prosecutors will abide by the Principles of Federal Prosecution when deciding whether to prosecute peripheral individuals.
- All Prior Misconduct Will be Considered. DOJ will evaluate all prior misconduct when considering corporate resolutions. DOJ is unconcerned whether the current matter under investigation is similar to prior matters. A history of misconduct across various areas may be indicative of a weak compliance culture that disincentivizes deterrence of criminal activity. The DAG added that DOJ will broadly evaluate companies’ historical misconduct to harmonize the way DOJ treats corporate and individual criminal histories, as well as to ensure that DOJ does not overlook important historical information when it formulates a resolution.
- Return of Corporate Monitors. Once a resolution format is developed, DOJ and the company will work together, with the understanding that the company will change its corporate culture, engage in continuous improvement to avoid the circumstances that led to the misconduct, and self-police. DOJ will turn to independent monitors to encourage and verify compliance with DPAs or NPAs. DOJ is continuing to evaluate the process it uses to appoint monitors to ensure the process is standardized, efficient, cost-effective, and eliminates perceptions of favoritism.
The DAG’s address highlighted other areas under consideration and review. For example, DOJ’s newly-announced Corporate Crime Advisory Group, which is comprised of representatives from every part of DOJ involved in corporate criminal enforcement, will evaluate and provide feedback on DOJ priorities and “make recommendations on what resources can assist more rigorous enforcement, and how [DOJ] ensure[s] that individual accountability is prioritized.”
Additionally, data shows that 10% – 20% of all significant corporate criminal resolutions involve companies that had previously entered into a pretrial resolution with DOJ. The DAG observed that some companies participate in pre-trial diversion programs but continue to engage in corporate crime. DOJ plans to hold companies accountable that breach NPAs and DPAs, “particularly if they compound their wrongdoing by knowingly hiding it from the government.” DOJ is evaluating how and whether to account for these companies differently, including whether to make corporate recidivists ineligible for NPAs and DPAs. The DOJ is considering whether the opportunity to receive multiple NPAs and DPAs currently instills a sense among corporations that these resolutions and the attendant fines are simply part of the cost of doing business, or if there are more effective approaches that can prompt cultural and institutional changes that will have a greater impact on deterring misconduct. The result of DOJ’s analysis may have significant impact on corporate resolutions going forward.
Companies should anticipate more corporate investigations. Company leadership must create a “tone from the top” that sets and reinforces a culture that disincentivizes misconduct and incentivizes compliance. This includes creating and adhering to a comprehensive, written compliance program that fits the risk profile of the organization; developing a whistleblower program to provide a means of reporting wrongdoing; and rigorously monitoring the compliance program. A robust compliance program is viewed as essential to avoid misconduct and, more importantly, may minimize attracting DOJ attention in the first instance.