DOJ further incentivizes corporate self-disclosures in first uniform policy

The CEP is divided into three parts, with specific policy prescriptions applying to defined categories of company conduct.

Under Part I, the DOJ provides that it will decline to prosecute a self-disclosing company for criminal conduct in the absence of aggravating circumstances, as long as the company takes the following actions:

• Voluntarily self-discloses the misconduct to the appropriate criminal component
• Fully cooperates with the investigation
• Remediates the misconduct in a timely and appropriate manner

Aggravating circumstances specifically include misconduct of a serious nature, egregious or pervasive misconduct within the company, severe harm caused by the misconduct, or corporate recidivism. However, as detailed below, even where aggravating circumstances are present, the new CEP makes clear that self-reporting misconduct will be rewarded.

Under Part II, the DOJ provides that a Non-Prosecution Agreement (NPA) will be available to a self-disclosing company that fails to otherwise meet the criteria for a declination under Part I – what the DOJ describes as a “near miss” – as long as the company takes the following actions:

• Fully cooperates with the investigation
• Remediates the misconduct in a timely and appropriate manner

As Part II makes clear, an NPA will be the default for a company that is ineligible for a declination because of a near miss in eligibility. And as the policy makes clear, this can occur when the reported misconduct was already known to the DOJ, the company had a preexisting obligation to self-disclose the misconduct, or the company delayed self-disclosing the misconduct for an unreasonable amount of time.

As the policy also makes clear, an NPA may also be available to a company when the presence of “aggravating circumstances” preclude the company from being eligible for a declination.

Under Part III, the DOJ affirms prosecutors’ discretion to determine appropriate criminal resolutions for all corporate entities that are not eligible for a declination or an NPA. But it also directs them to apply a presumption that monetary penalty reductions will be taken from the low end of the Sentencing Guidelines range for companies that fully cooperate and appropriately remediate misconduct in a timely manner.

Key takeaways

• The CEP – which will supplant any other existing policies at DOJ divisions or US Attorney’s Offices nationwide – promotes uniformity, transparency, and fairness in self-disclosure practices and incentivizes responsible corporate behavior.
• The CEP formalizes the DOJ’s increasing movement toward declinations as the default for companies that self-report misconduct in a timely manner, assuming appropriate cooperation and remediation steps are taken. While that trend has been under way, its formalization in the CEP represents a significant shift relative to the DOJ’s historical practices.
• The CEP also reflects the DOJ’s shift away from charging self-reporting companies generally, with Part II making an NPA the default for most companies that fail to qualify for a declination. In particular, the policy makes clear that the presence of aggravating circumstances will no longer mandate criminal prosecution, and companies can now expect to receive an NPA, assuming all other conditions are met, even when the disclosed misconduct is serious, pervasive, or severely harmful or the company is a repeat offender.
• In order to take full advantage of the benefits under the new CEP, companies should prioritize establishing and maintaining effective compliance programs with robust whistleblower protections to ensure that misconduct is reported in a timely manner and appropriately escalated. The CEP’s emphasis on individual accountability in both reporting and remediating identified misconduct ensures that investment in compliance programs will be amply rewarded.