Deputy Attorney General’s Speech Highlights Changes in How DOJ Investigates and Prosecutes

In a speech last week, Deputy Attorney General Lisa Monaco touched on a number of topics that should interest readers of this blog.  First, although the topic of her speech was corporate criminal enforcement, DAG Monaco stressed that DOJ’s “number one priority is individual accountability.”  While individual accountability is not a new theme, the speech suggested that companies may see a new level of urgency to government investigations. DAG Monaco stated, “In individual prosecutions, speed is of the essence.”  For companies (who routinely control the documents and information relevant to the government’s investigation of individuals), she warned “undue or intentional delay in producing information or documents—particularly those that show individual culpability—will result in the reduction or denial of cooperation credit” for the company.

The next topic that DAG Monaco addressed was corporate recidivism.  The speech explained how DOJ will look at that issue. Of particular interest to readers of this blog, she noted “if a corporation operates in a highly regulated industry, its history should be compared to others similarly situated, to determine if the company is an outlier.”  She also explained that while the evaluation of prior misconduct is a multi-factor analysis, “dated” misconduct is given less weight, defining dated as “[c]riminal resolutions that occurred more than 10 years before the conduct currently under investigation, and civil or regulatory resolutions that took place more than five years before the current conduct.”  Of further interest to those considering acquisition of a company with a troubled past, DAG Monaco explained “We will not treat as recidivists companies with a proven track record of compliance that acquire companies with a history of compliance problems, so long as those problems are promptly and properly addressed post-acquisition.”

The speech’s third topic, voluntary self-disclosure is potentially the most significant. DAG Monaco announced that “every Department component that prosecutes corporate crime will have a program that incentivizes voluntary self-disclosure.” While programs may vary in some respects, “Absent aggravating factors, the Department will not seek a guilty plea when a company has voluntarily self-disclosed, cooperated, and remediated misconduct.”  Whether programs will offer any guidance on what constitutes “aggravating factors”—an exception that could swallow the rule—remains to be seen.

DAG Monaco closed her speech by discussing how DOJ views corporate compensation. She explained “when prosecutors evaluate the strength of a company’s compliance program, they will consider whether its compensation systems reward compliance and impose financial sanctions on employees, executives, or directors whose direct or supervisory actions or omissions contributed to criminal conduct.”  While the speech did not identify any examples of compliance bonuses, it did note compensation clawbacks as one example of a compensation policy to deter misconduct.

We expect further guidance documents on these topics in the coming days and will continue to follow how these changes play out both on paper and in practice.