As spring gives way to summer, the first “green shoots” signaling the willingness of the Antitrust Division of the U.S. Department of Justice to credit compliance programs have emerged. For the first time ever, the Division has awarded a company sentencing credit for implementing an effective compliance program after the commencement of an investigation. Barclays PLC is the recipient, earning credit in connection with a plea agreement entered late last week in connection with its participation in the alleged forex cartel conspiracy. Barclays was one of five investment banks to plead guilty as part of an investigation into a conspiracy that purportedly sought to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange spot market.
The sentencing credit appears in a single sentence in Barclays’ plea agreement: “The parties further agree that the Recommended Sentence is sufficient, but not greater than necessary to comply with the purposes set forth in 18 U.S.C. § 3553(a), 3572(a), in considering, among other factors, the substantial improvements to the defendant’s compliance and remediation program to prevent recurrence of the charged offense.” In other words, the Justice Department gave Barclays credit for improving its compliance program after the violations had occurred. No other bank that entered guilty pleas that day had similar language in their plea agreements, nor does it appear that any of them received any sentencing credit for their compliance programs.
The Division’s recognition of and credit for a company’s compliance program follows seeds sown last September when Brent Snyder and Bill Baer, the leading Antitrust Division officials responsible for criminal enforcement, both delivered speeches emphasizing the importance of compliance. Snyder, the head of criminal enforcement at the Division, devoted his entire speech to compliance as a corporate culture and promised that the Division was “actively considering ways … [to] credit companies that proactively adopt or strengthen compliance programs after coming under investigation.” Baer, the head of the Division, emphasized that it was important for companies to adopt an “effective” approach to compliance.
Barclays’ plea demonstrates the Division’s commitment to encouraging companies to grow their antitrust compliance programs by emphasizing the benefits available to companies that implement an effective program. But the plea also highlights that companies must be proactive in a global environment where antitrust enforcement is ever expanding with an increasing number of jurisdictions investigating and prosecuting antitrust offenses. All companies should review and, if necessary, update their antitrust compliance programs as part of an integrated approach toward compliance that balances the company’s risk profile with the heightened global regulatory environment. Indeed, companies would be wise to ensure that antitrust is part of a comprehensive corporate approach to compliance that incorporates policies in other areas of increased regulatory scrutiny, such as anti-corruption, trade controls, and data privacy. A comprehensive approach to compliance can help companies minimize regulatory risk while allowing them to focus on developing their clients and business.
What then should a company’s compliance program be built around? As we advised in an article earlier this year, an effective compliance program should have, at a minimum, the following four goals:
- Prevention – clearly articulate the standards for behavior in the company that form its culture of compliance. Employees should be given practical advice and the policy should provide a structure and clear requirements for seeking legal counsel’s advice in situations that raise particular risk.
- Detection – include a mechanism for detecting violations. This requires internal monitoring and enforcement systems to detect and identify potential misconduct, for example, anonymous company hotlines to report anticompetitive behavior and online surveys requiring employees to certify adherence with the company’s compliance program.
- Reaction – a plan for responding if a violation is detected. This can include conducting a prompt and thorough internal investigation, immediate cessation of any illegal activity and effective disciplinary response for offenders.
- Tone from the Top – a commitment by the Board and senior executives to implement and adhere to a culture of compliance.
The latter point is one that Brent Snyder himself cited to in his speech last year, “[i]f the bosses take compliance seriously, the employees are far more likely to take it seriously.” The sentencing credit given to Barclays demonstrates that the Antitrust Division is committed to encouraging the “green shoots” of compliance to develop within companies. Given the potential benefits, companies would be wise to analyze their compliance programs to make sure that they are comprehensive in covering antitrust and all other areas of potential regulatory risk.