Reed Smith Client Alerts

On January 17, 2023, the U.S. Department of Justice (DOJ) Criminal Division (DOJ) announced important revisions to its Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) designed to incentivize corporations to self-disclose and cooperate with law enforcement. Among other things, the revisions: (1) significantly enlarge the potential reductions in penalties for companies that self-report and cooperate; (2) provide companies that voluntarily self-disclose and cooperate a presumption that they will receive a declination; and (3) permit so-called recidivist corporations to potentially receive a declination if they exhibit extraordinary cooperation. The announcement expands upon a September 2022 speech given by Deputy Attorney General Lisa O. Monaco, which emphasized the importance of self-disclosure and cooperation discussed in our prior client alert. These revisions represent the most significant changes to the CEP since its adoption in 2017.

Presumption of a declination

The CEP now states that, when a company has voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated, there will be a presumption that the company will receive a declination (i.e., a decision not to prosecute), absent aggravating circumstances.

Aggravating circumstances that may instead warrant a criminal resolution include: executive management’s involvement in the misconduct, significant profit to the company resulting from the misconduct, the pervasiveness of the misconduct within the company, or criminal recidivism. Additionally, to qualify for a declination, a company must pay all disgorgement, forfeiture, or restitution where ordered.

Other factors that may justify a declination

Even where a company does not qualify for a presumed declination, the DOJ may nonetheless determine that a declination is warranted under the revised CEP if all the following factors are present: (1) the company voluntarily and immediately discloses the misconduct; (2) the company has an effective compliance program and system of internal accounting controls in place that enabled the detection of the misconduct; and (3) the company provides “extraordinary cooperation” to the DOJ and subsequently remediates. Importantly, this means that even companies deemed recidivists can still qualify for a declination under the new CEP.

The DOJ noted it will assess what is “extraordinary” by analyzing the “immediacy, consistency, degree, and impact” of the cooperation provided. For example, companies would need to allow the DOJ to access evidence that it could not otherwise obtain, including individuals’ electronic devices and recorded conversations, and provide “cooperation that produces results,” such as trial testimony or information leading to additional convictions. The CEP reinforces the DOJ’s earlier guidance that companies are expected to preserve, collect, and disclose business communications in order to receive cooperation credit (see our prior client alert discussing these updates in detail).