On March 25, 2019, partners Lev Dassin and Arthur Kohn participated in a webcast hosted by The Conference Board, entitled “Corporate Prosecutions: What Companies, Boards and Executives Need to Know.” Daniel Gitner, a partner at Lankler Siffert & Wohl, also participated on the panel.
The panelists and moderator Doug Chia, executive director of The Conference Board, began by discussing corporate prosecutions generally, including the history of corporate prosecutions and how DOJ attitudes regarding corporate prosecutions have changed over time. Dassin explained that the DOJ has more recently refocused its attention on prosecuting individuals engaged in corporate misconduct.
The panelists then discussed recent changes in DOJ policy that will have an impact on corporate prosecutions, including:
- First, there was an expansion of the FCPA Corporate Enforcement Policy. In late 2017, the DOJ announced a new FCPA Enforcement Policy, which built upon a 2016 Pilot Program. Under the program, absent “aggravating circumstances,” there is a presumption that the DOJ will decline to prosecute a company that: (i) voluntarily self-discloses wrongdoing before “an imminent threat” that the government will learn of the matter; (ii) provides “full cooperation,” including by proactively producing documents and other information, providing evidence with respect to the culpability of individuals, and making available witnesses located in the U.S. and abroad; and (iii) engages in “timely and appropriate” remediation, including the disgorgement of any profits from the wrongdoing.
- Second, changes regarding corporate cooperation credit with respect to individuals. Under the earlier DOJ policy, memorialized in the Yates Memo, in order for companies to receive full cooperation credit, companies had to provide information about all individuals involved in culpable activity. But, the DOJ announced a new policy late last year that companies seeking cooperation credit are now only required to identify every individual who was “substantially” involved in or responsible for the criminal conduct.
- Third, the DOJ announced last year a new anti-“piling on” policy, known as the “Policy on Coordination of Corporate Resolution Penalties.” This policy is designed to promote coordination and limit the imposition of multiple penalties on a company for the same conduct, commonly known as “piling on.” The policy encourages federal prosecutors to consider the potential imposition of penalties on companies by different regulators and authorities in the United States and abroad for the same underlying misconduct.
The panelists discussed how these three changes to DOJ policy throughout 2018 reinforce the DOJ’s efforts to encourage companies to self-report and cooperate, both by providing companies with greater transparency regarding the benefits of their cooperation and by offering the possibility of a coordinated resolution that minimizes a company’s financial exposure to multiple authorities.
The panelists concluded by discussing the implications these policy changes have for companies, executives, and boards, including claw-back provisions.
A replay of the webcast is available here (please note that your browser may require you to run an Adobe plugin to access this content).