The U.S. Department of Justice (DOJ) issued new policies Sept. 9. One requires that companies disclose all facts relating to individual misconduct discovered during internal investigations or be considered uncooperative. This places pressure on corporations to turn over evidence against their own executives. The policy comes after ongoing criticism of the DOJ’s failure to prosecute individuals in the wake of the 2008 financial crisis.
The memorandum, issued by Deputy Attorney General Sally Q. Yates, marked the first major policy announcement of Attorney General Loretta Lynch since she took office in April. The Yates memorandum enumerates six key steps to strengthen prosecutions against individual defendants:
- To receive any cooperation credit, a corporation must provide the DOJ with all relevant facts about individuals involved in the corporate misconduct
- Government criminal and civil investigations of corporations should focus on individuals from the inception of the investigations
- Government criminal and civil attorneys handling investigations of corporations should be in routine communication with each other
- Absent extraordinary circumstances, the DOJ will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation
- Corporate prosecutions should not be resolved without a clear plan to resolve related individual cases before the statute of limitations expires and declination decisions against individuals must be memorialized
- Government civil attorneys should focus on individuals and evaluate whether to bring a suit against an individual based upon considerations beyond the individual’s ability to pay
In the memorandum, and in subsequent interviews, Yates made it clear that for a corporation to receive “any cooperation credit,” corporations must provide the DOJ with “all relevant facts relating to the individuals responsible for the misconduct.”
The new policy will affect internal investigations undertaken by companies that voluntarily disclose improper corporate practices but stop short of identifying who actually engaged in the wrongdoing and exactly what they did. Yates has insisted that the new policy will encourage companies to turn in their executives and that the DOJ will not allow companies to place blame on low-level officials. Yates stated that the DOJ will not accept “a company’s cooperation when they just offer up the vice president in charge of going to jail.”
The new policies take effect immediately but they are unlikely to apply to investigations that are near disposition.
It is unknown whether the new policies will result in corporations providing more information about individual misconduct or will lead companies to choosing to not cooperate and instead to challenge allegations of wrongdoing in court. Regardless of the result, companies performing internal investigations are now on notice that they are expected to disclose the misconduct of individuals if they wish to obtain any cooperation credit.