Nicolas Bourtin and Kate Doniger, Sullivan & Cromwell

This is an extract from the third edition of GIR's The Practitioner’s Guide to Global Investigations. The whole publication is available here

24.2 Strategic considerations

As a preliminary matter, it is important to consider the impact of all interactions with US authorities on the company’s ability to reach a settlement on favourable terms. Even early in an investigation, a corporation can develop a co-operative working relationship with an enforcement agency through prompt and complete disclosure and assistance with requests and inquiries. While co-operation is not the right strategic approach in all cases – companies may choose to take a more adversarial approach, even early in an investigation – establishing a record of proactive and complete co-operation can have a substantial effect on the final terms of any resolution, as US government authorities typically consider the nature and extent of a corporation’s co-operation with the investigation in contemplating whether to settle a matter and on what terms. Indeed, both the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC, or the Commission) have explicitly included voluntary disclosure and co-operation in their enforcement policies. As outlined in the DOJ’s Justice Manual, in determining whether and to what extent to award a company co-operation credit, the DOJ considers, among other things, ‘the timeliness of the co-operation, the diligence, thoroughness and speed of the internal investigation, and the proactive nature of the co-operation.’ Similarly, the SEC Enforcement Manual provides that a company’s co-operation is evaluated by considering self-policing, self-reporting of misconduct, remediation and co-operation with the investigation As a result, by conducting an internal investigation and self-reporting potential misconduct to the authorities, a corporation may increase its chances of receiving co-operation credit and, in turn, more favourable settlement terms.

At the close of the government’s investigation, when beginning to negotiate the terms of a potential settlement agreement, a corporation must be particularly attuned to both the timing and the breadth of such an agreement. Regarding timing, certain stages of litigation can be particularly costly for a corporation; securing settlements early may be advantageous for a corporation. For example, in some cases – particularly where the key facts are known early and there is public pressure on the government to act quickly – a speedy settlement may be struck before a lengthy and expensive investigation is conducted. Such circumstances are rare, however, and the government will normally be reluctant to reach a settlement before a full investigation has been completed.

Another pivotal point to consider is whether settlement can be achieved before indictment or the filing of a complaint, as such public actions carry the risk of significant legal, financial and reputational consequences. And in fact most negotiated corporate resolutions are reached before charges are filed, as companies are eager to avoid the uncertain public and shareholder reaction to a contested litigation. A recent economic study showed that a company’s share price generally decreases more dramatically as a result of the announcement of a government investigation if there is no concurrent resolution. The extent of share price declines can, among other effects, have great significance in follow-on civil litigation.

In terms of the breadth of a potential settlement agreement, a corporation must consider the scope of the conduct being investigated and the scope of the potential release from liability. At the conclusion of the government’s investigation, to the extent that it opts to pursue charges related to certain alleged misconduct, it can be advantageous for those charges to be reflected in a single settlement agreement or in distinct agreements announced simultaneously, so as to mitigate the risk of legal, financial and reputational harm associated with multiple days of negative press, carry-over investigations and future litigation. In the event that the government determines not to pursue charges against the company or its employees, it can be advantageous to diplomatically encourage a declination – a formal notice that the government has declined to pursue the case further, to provide the company valuable closure.

Owing to the government’s increased focus on the prosecution of individuals, however, it is increasingly unlikely that the government will release from liability company employees who engaged in potential wrongdoing as part of a settlement with a company. The DOJ formalised its increased focus on the prosecution of individuals with the publication of the ‘Yates Memorandum’. On 9 September 2015, the DOJ issued this new policy memorandum, signed by then Deputy Attorney General Sally Quillian Yates, regarding individual accountability for corporate wrongdoing. The Yates Memorandum memorialised certain government sentiments demonstrating an inclination toward the prosecution of individuals in corporate fraud cases. The Yates Memorandum outlined that individual accountability is important for several reasons, including (1) deterring future illegal activity, (2) incentivising changes in corporate behaviour, (3) ensuring the proper parties are held accountable for their actions and (4) promoting the public’s confidence in the justice system. The Yates Memorandum provided six ‘key steps’ to strengthen the government’s pursuit of individual wrongdoing, including, among others, by specifying that ‘absent extraordinary circumstances or approved departmental policy, the Department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation.’ Even after the change in administration in 2017, it appears that the DOJ’s focus on individual accountability will continue.

Similarly, in the securities enforcement context, the SEC recently expressed an increased focus on charging individuals responsible for wrongdoing. In particular, Mary Jo White, the former Chair of the SEC, has highlighted that one new approach to charging individuals is to use Section 20(b) of the Exchange Act to target those who have ‘engaged in unlawful activity but attempted to insulate themselves from liability by avoiding direct communication with the defrauded investors.’

24.3 Legal considerations

24.3.1 Privilege considerations

At times during the investigative process, legal considerations may be in tension with strategic ones – a corporation should be cognisant of the potential for such tensions to navigate toward an agreeable settlement without unnecessarily waiving any valuable rights. In particular, a company may need to weigh the value of additional co-operation credit for disclosing relevant privileged documents to the government against the value of protecting privileged documents from future discovery in follow-on civil litigation.

On the one hand, the government may consider the disclosure of privileged documents in determining the corporation’s level of co-operation. Under current DOJ policy, for example, ‘cooperation credit is not predicated upon the waiver of attorney–client privilege or work-product protection,’ although co-operation – particularly under the Yates Memorandum – still requires the timely disclosure of ‘relevant facts’, which may require the disclosure of some privileged materials, such as memoranda of witness interviews prepared during an internal investigation. On the other hand, disclosure to the government of documents prepared during the course of an investigation may waive any relevant protections during follow-on civil litigation. In such instances, a company may consider entering into a limited waiver agreement with the government as a middle ground, but it must keep in mind that courts may be sceptical of a limited waiver agreement, even when paired with a confidentiality agreement. Recent amendments to the SEC Enforcement Manual indicate that advocacy materials presented to the SEC may be discoverable and admissible in evidence, notwithstanding the protections of Federal Rules of Evidence 408 and 410.

As part of its investigative process, the government may also engage the company in discussions as to whether charges are warranted. Government authorities may convey this information to the company orally, through reverse proffers, or in writing, through a document such as the SEC’s Wells notice. Upon receipt of such information, the company then generally may respond with its arguments as to why the government should not bring an enforcement action. While providing a response is usually advisable and carries the prospect of success, in certain circumstances, a corporation may determine that it is not in the company’s best interest. Among other considerations, a Wells submission is not privileged or confidential, and therefore can be used later against the corporation in civil litigation or made publicly available. In the alternative, the corporation may opt to initiate a meeting with the authorities to discuss the proposed charges, to prevent the creation of discoverable material and foster a dialogue between the company and the government.

During settlement negotiations, a corporation must also be careful in sharing drafts of settlement documents because materials shared with the government may become discoverable in civil litigation. Although Federal Rule of Evidence 408 generally protects documents related to settlement negotiations, the documents may nonetheless ultimately be deemed discoverable, or even admissible as evidence.

24.3.2 Limitations and tolling agreements

In the course of a government investigation, statutes of limitation will often come into play. At the outset of an investigation, particularly if the investigation commences toward the end of a particular statutory period, the government may ask the company to sign a tolling agreement, an agreement to waive a right to claim that litigation should be dismissed owing to the expiry of a statute of limitations for a particular period. It may be in the best interest of the company to sign it, as a form of co-operation and to avoid a precipitous filing of charges by the government. If a tolling agreement has not been signed at an earlier stage in the investigation, the government may ask a corporation to sign one during the settlement negotiation process, especially if a potential limitations period is about to close. In this context, tolling agreements serve to relieve the government of the pressure of taking formal action before the relevant limitations period runs, and allow for time for additional sharing of information in the hope of facilitating a settlement agreement.

24.4 Forms of resolution

24.4.1 Prosecutorial settlements: DPAs, NPAs and guilty pleas

In past years, most corporate criminal investigations initiated by US prosecutors were resolved by deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs). DPAs and NPAs are generally thought of as a middle ground between declining prosecution and obtaining a conviction. Although in recent years there have been some high-profile corporate guilty pleas, there is no indication yet that these guilty pleas will overtake NPAs and DPAs as prosecutors’ primary settlement mechanism.

In a deferred prosecution, the government brings criminal charges against the company, which it agrees to dismiss at the end of a specified period if the company complies with the DPA’s terms. Because a DPA is filed with the court, it becomes a public document.

A non-prosecution differs in that no criminal charges are filed against the company. As a result, an NPA need not be made public unless prosecutors seek to publicise the results of the investigation or the company is itself required to disclose the agreement. The DOJ commonly uses both forms of agreement to resolve investigations concerning, among other things, fraud, the Foreign Corrupt Practices Act, the False Claims Act, the Bank Secrecy Act and antitrust laws. In previous years, DPAs and NPAs were the exclusive domain of the DOJ, but the SEC and state prosecutors have also recently adopted their use, using the agreements to resolve certain securities law violations.

Unlike an NPA, over which the government has full discretion to adopt terms and conditions, a DPA may be subject to some level of judicial review pursuant to the Speedy Trial Act. Because a DPA involves the filing of an information or indictment, the Speedy Trial Act requires trial to start within 70 days. However, the Speedy Trial Act allows this 70-day period to be tolled with the ‘approval of the court, for the purpose of allowing the defendant to demonstrate his good conduct.’ Although this provision suggests that courts have a role in overseeing DPAs, judges have historically been relatively deferential to the government in approving them.

Two recent decisions from the Courts of Appeals for the DC and Second Circuits confirm that the longstanding practice of limited judicial oversight over consensual enforcement settlements is the favoured approach. In each case, the district court refused to approve a settlement that the court deemed too lenient, and was reversed by the Court of Appeals on the grounds that the trial court’s discretion in such circumstances is quite limited. In April 2016, in United States v. Fokker Services BV, the DC Circuit Court of Appeals issued a writ of mandamus and vacated a decision by District Judge Richard Leon, rejecting as too lenient a proposed DPA between the DOJ and Fokker Services. The Court of Appeals reasoned that ‘the court’s withholding of approval would amount to a substantial and unwarranted intrusion on the Executive Branch’s fundamental prerogatives.’ Similarly, in June 2014, the Second Circuit issued a decision in SEC v. Citigroup Global Markets, calling into question the appropriateness of judicial scrutiny of consensual settlements with the SEC. In a decision that reversed a notable opinion written by Judge Jed Rakoff criticising an SEC settlement with Citigroup as insufficient, the Second Circuit made clear that courts must afford the SEC’s policy judgements ‘significant deference’ including whether, when and how to resolve enforcement proceedings. Under Citigroup, a district court’s review of a settlement agreement is narrow and limited. Subsequent cases have added glosses to the Citigroup holding, with some district courts exerting discretion over certain aspects of settlement agreements, including the selection of an independent monitor.

Despite the reversals, the district courts’ criticisms are broadly consistent with those expressed in recent years by a number of federal judges who have hesitated before ultimately approving DPAs and other similar government settlements. In those other instances, the courts’ criticisms commonly have included assertions that those settlements lacked (1) a large enough penalty amount (relatedly, there is concern that companies will begin to view monetary penalties merely as ‘a cost of doing business’), (2) admissions of wrongdoing by the company, (3) charges against the individuals who were responsible for the offence, (4) sufficient factual detail for the judge to evaluate the agreement, sufficient remedial obligations for the company and (6) sufficient reporting to the court about the company’s compliance with the agreement.

In recent years, perhaps as a result of political and public pressure, including such public criticism of DPAs from the federal courts, there has been a marked uptick in guilty pleas to resolve criminal actions. The major difference between a guilty plea and an NPA or DPA is that a guilty plea results in a conviction, which generally comes with harsher collateral regulatory consequences and more significant reputational harm. Such risks for a corporation are significant, especially in a heavily regulated industry – the ramifications can be wide-ranging and unclear.

24.4.2 Regulatory settlements: consent orders and civil NPAs and DPAs

Companies under investigation by federal and state regulators whose enforcement mechanisms are administrative or civil may resolve an investigation by voluntarily entering into a consent order where an institution typically consents to the issuance of a cease-and-desist order or the assessment of a civil monetary penalty, or both. A consent order, like a cease-and-desist order or a civil monetary penalty assessment, is a formal enforcement action; it is a public document and, although it may not always be filed, its terms are enforceable in court. Consent orders often vary in the level of detail they provide concerning the wrongdoing, although they are often less detailed than a criminal settlement. A consent cease-and-desist order may oblige the company to undertake remedial measures to correct the misconduct and ensure future compliance. The term of the order is usually indefinite. A consent civil monetary penalty assessment merely obliges the institution to pay a penalty, and the order’s terms are fully satisfied by the payment.

Some regulators have adopted NPAs and DPAs that are similar to their criminal counterparts’. For example, the SEC, which is responsible for civil enforcement and administrative actions to enforce the securities laws, has begun to use NPAs and DPAs to resolve cases ‘where an entity or person has engaged in misconduct and where the co-operation is extraordinary, but the circumstances call for a measure of accountability.’ Although available as an option, NPAs and DPAs remain relatively uncommon for civil enforcement actions by the SEC.

24.5 Key settlement terms

Whether negotiating a settlement agreement in the criminal or regulatory context, many common principles come into play. To facilitate a successful negotiation, a company must have a comprehensive understanding of (1) benchmark terms for historical settlements regarding similar misconduct, (2) those terms that are most significant to the company and (3) any distinguishing factors in the matter at issue that encourage terms less severe than the benchmarks.

24.5.1 Monetary penalties

Nearly all corporate settlements with US authorities include some form of monetary penalty. The form largely depends on the regulator and its practices. Typically, monetary penalties in regulatory settlements consist of a civil monetary penalty. Disgorgement of profits or restitution to harmed parties may also be required.

The SEC considers two principal factors in determining monetary penalties: the presence or absence of a direct and material benefit to the corporation itself as a result of the violation and the degree to which the penalty will recompense or further harm the injured shareholders. The SEC will also consider factors such as deterring the conduct, the extent of the injury, any complicity on the part of the corporation, the intent of the individuals committing the wrong, the difficulty in detecting that particular type of wrongdoing, any remedial steps taken by the corporation and the extent of its co-operation. Generally, the factors that US authorities consider in determining monetary penalties mirror those used to determine whether to bring charges against the corporation in the first place, including the nature of the offence, the company’s timely and voluntary disclosure of wrongdoing, and the company’s remedial actions.

It is important, however, to keep in mind that, in recent years, settlement values generally have been increasing though there is some indication that this trend may be slowing. In the 2015 fiscal year, the DOJ collected more than US$23 billion in civil and criminal penalties, including US$5 billion in penalties from Bank of America under the Financial Institutions Reform, Recovery and Enforcement Act. In the 2016 fiscal year, the DOJ collected more than US$15.3 billion in civil and criminal penalties, including residential mortgage lending-related settlements from Goldman Sachs Group, Morgan Stanley & Company and Wells Fargo Bank, NA, amounting to US$2.96 billion, US$2.6 billion and US$1.2 billion, respectively. From 2005 to 2015, the total criminal fines and penalties assessed by the DOJ’s Antitrust Division increased an entire order of magnitude, from US$338 million in 2005 to US$3.6 billion in 2015. In the 2016 fiscal year, however, the total decreased to US$399 million, and in 2017, the total decreased to $67 million.

Many of those settlements called for payments by the settling companies to third-party community organisations that were not directly harmed by the alleged fraud. In a policy change announced in June 2017, Attorney General Jeff Sessions issued a memorandum prohibiting DOJ attorneys from making settlements conditional on payments to non-governmental organisations not directly harmed by a company’s alleged misconduct.

The SEC has also dramatically increased its use of ‘aggressive’ monetary penalties. Whereas a record-setting penalty in 2002 reached a mere US$10 million, the mean payment for certain cases between 2010 and 2013 was over US$50 million. Three of the top 10 monetary settlements imposed in public company-related actions were imposed in 2016. These include a US$415 million action against Merrill Lynch and a US$267 million action against JP Morgan wealth management subsidiaries. As of October 2016, SEC enforcement settlements related to misconduct leading to or arising from the financial crisis exceeded US$3.76 billion for the 204 entities and individuals charged. An important June 2017 decision that may diminish the SEC’s leverage in settlement negotiations is Kokesh v. SEC, in which the Supreme Court held that a five-year statute of limitations applies to SEC enforcement actions seeking disgorgement. The decision also raises the question of whether the Court would, in fact, recognise disgorgement as an available remedy in SEC enforcement proceedings. Notably, in 2017, the SEC collected US$1.2 billion in settlements with public companies and subsidiaries, almost all of it within the first half of the year.

24.5.2 Continuing obligations

In addition to monetary penalties, settlement agreements will often include other continuing obligations. In particular, settlement agreements almost always contain language stating that the company will commit to undertake remedial efforts, such as the enhancement of its compliance programmes or an obligation to report potential violations of law in the future. To ensure ongoing compliance and satisfactory remedial efforts, in recent years, government agencies have increasingly required the use of corporate monitors to keep corporations accountable.

One common obligation in corporate settlements is the imposition of a monitor to oversee the company’s compliance with the settlement agreement and report back to the government on the company’s progress. Monitorships, which may last for a number of years, are a financial and functional burden on a company. Monitorships can be draining in terms of the cost of retaining the monitor itself, the costs required to implement recommended reforms, the cost of staffing and maintaining an internal team to work closely with the monitor and the disruption to the company’s business and management. Another important consideration when contemplating a monitorship as a term of settlement is that monitors are generally given broad access to the corporation’s files, outside the protection of an attorney–client relationship. This lack of attorney–client relationship can pose a risk of further legal exposure for the company. Given that a monitor is tasked with reviewing the corporation’s practices, and reporting the findings of the review to relevant authorities, it is possible that the monitor will identify and be obliged to disclose additional violations of law to relevant authorities. In addition, once a monitor’s reports are submitted to the relevant authorities, those reports and any documents contained in them can be subject to Freedom of Information Act (FOIA) requests, which may create additional exposure in follow-on civil litigation.

Given the substantial expense and disruption caused by a monitorship, it is in a corporation’s interest to try and avoid the imposition of a monitor – especially in instances where corporate culpability is relatively low and the company has already undertaken substantial remedial efforts. The most effective means for a company of avoiding the imposition of a monitor continue to be to voluntarily report its misconduct, to co-operate fully with the government’s resulting investigation and to demonstrate to the government that the company has already undertaken a comprehensive remediation plan. Where a monitor is imposed, a corporation can mitigate the disruption by negotiating the monitor’s duration of assignment, scope of responsibility, decision-making capacity and accessibility to corporate files.

24.5.3 Collateral consequences

A criminal or regulatory settlement can also trigger a number of collateral consequences, which can vary depending on the types of violations the settlement covers and the industry of the affected entity. For example, a guilty plea for a bank could mean the loss of its financial holding company status and federal deposit insurance, the appointment of a receiver or conservator, and, for foreign banks, the potential termination of offices in the United States. A guilty plea for a broker-dealer could mean automatic loss of broker-dealer registration, a bar from acting as a registered investment adviser, and revocation of its status as a well-known seasoned issuer. A guilty plea for a corporation could also result in, among other things, disqualification from membership of certain self-regulatory organisations, a temporary or permanent bar from participation in federal procurement contracts (debarment), or loss of state licences. Compounding these difficulties, many of the collateral consequences that arise upon conviction travel within a corporation’s legal structure, so that even regulated businesses that were not involved in the offence can be subject to licence revocations, loss of securities law safe harbours and other consequences.

Corporations may need to seek waivers or exemptions from multiple regulators, including the SEC, the Commodity Futures Trading Commission, the Federal Reserve, the Department of Labor and the Financial Industry Regulatory Authority, to allow them to continue engaging in the affected business activities, a process that should be planned well in advance of settlement. Each regulator may have more than one relevant exemption. The company will therefore need to assess the relevant regulations for each authority that oversees the company’s activities. The permutations of collateral consequences are many and depend on the form of the settlement (e.g., DPA, NPA, guilty plea, conviction or consent order) or even the nature of the offence. In addition to automatic disqualifications, there is a wide array of discretionary actions available to regulators for which waivers or exemptions could be sought.

The method of receiving a waiver or exemption from these collateral consequences depends on the agency. For the SEC, a corporation requests an exemption from the SEC Staff, which can either make a recommendation to the Commission or act directly on the application with delegated authority from the Commission. The SEC generally grants a waiver under a finding of ‘good cause’. In contrast, the Department of Labor, in granting exemptions for qualified professional asset manager status, engages in a formal rule-making process, including a public notice and comment period. The Federal Reserve, which can take a range of discretionary actions, generally engages in a more informal regulatory-relations dialogue when considering the collateral consequences of a significant settlement.

Timing is critical for the waiver process, because a company will need to ensure that there is no gap in its licences and statuses. Complicating matters, regulators often take different views as to when statutory disqualifications based on convictions or settlements commence. The SEC views ‘conviction’ as entry into a guilty plea, so any relevant SEC waivers need to be lined up before then. In contrast, the Department of Labor says that conviction is at sentencing, which can take place well after the entry of the guilty plea. For this reason, sentencing after the entry of a guilty plea can be delayed for the purpose of obtaining the necessary exemption from the Department of Labor.

In recent years, the granting of waivers in connection with corporate settlements has drawn criticism by some in the government and the media that enforcement agencies have been too lenient in releasing companies from the consequences of their settlements, particularly in the case of companies that have been the subject of multiple enforcement actions. There is every reason to believe that going forward the relevant agencies will require increasingly high showings by companies before agreeing to grant the necessary waivers.

24.5.4 Admissions and follow-on civil litigation

With increasing frequency, as a condition of settlement, government authorities are requiring corporations to make factual or legal admissions, or both. For example, prior to 2013, the SEC had a long-standing policy of settling cases without requiring admissions from defendants. In June 2013, however, following public criticism, including in the wake of Judge Rakoff’s denial of approval of the SEC’s settlement with Citigroup, the Commission changed its policy ‘by requiring admissions of misconduct in certain cases where heightened accountability and acceptance of responsibility by a defendant are appropriate and in the public interest.’ The SEC has defined these types of cases as including instances (1) where the violation of the securities laws involved particularly egregious conduct, (2) where large numbers of investors were harmed, (3) where the markets or investors were placed at significant risk, (4) where the conduct obstructs the Commission’s investigation, (5) where an admission can send an important message to the markets or (6) where the wrongdoer poses a particular future threat to investors or the markets. Nevertheless, the SEC has also acknowledged that ‘for reasons of efficiency and other benefits’, including getting significant relief, eliminating litigation risk, returning money to victims expeditiously and conserving enforcement resources for other matters, ‘most cases will continue to be resolved on a “neither admit not deny” basis.’ Indeed, even under the new policy, admissions still appear to be infrequent.

In addition to the reputational impact and collateral consequences that such admissions can impose on a corporation, admissions can expose a company to significant liability in follow-on civil litigation. Plaintiffs may be able to rely on factual or legal admissions in settlement agreements to support a complaint, and may attempt to introduce them as evidence later. A corporation will have a strong argument that an administrative consent order does not represent an adjudication and cannot be relied on in a complaint; DPAs and NPAs have been used in follow-on litigation with mixed results.

A corporation entering into a settlement agreement ideally should, to the extent possible, try and neither admit nor deny the charges, in which case the findings of the order are less likely to be able to be used against it. In the event that a corporation is unable to do so, a company should strategically negotiate for narrowly tailored factual statements and flexible language to enable it to defend itself in follow-on civil litigation. In particular, admitting to a generalised violation of law may be less likely to have future adverse consequences than admission of a specific legal violation that shares elements of claims that could be brought in follow-on civil litigation. For example, a corporation could admit to various controls-based violations in a settlement with the SEC rather than admitting to securities fraud. Or, a corporation could admit to a violation that does not contain a scienter element or does not concede that anyone was harmed as a result – necessary elements for many private causes of action.

Furthermore, a corporation should be aware that settlement agreements that dictate that the corporation cannot contradict the findings of facts can restrict the corporation’s positions in follow-on civil litigation. Because any statement that could be viewed by the government as contradictory to the facts of the agreement may then be seen as a breach – thereby reviving a prosecutorial or regulatory action – it is important that such agreements, at a minimum, contain exceptions that allow a company to take good-faith positions in follow-on civil litigation.

24.6 Resolving parallel investigations

24.6.1 Other domestic authorities

Most large-scale investigations of corporations involve a number of government agencies from federal and state governments, both prosecutorial and regulatory. The degree of coordination among these agencies varies case by case, and coordinating with multiple agencies can be challenging. However, there can be benefits to coordinated settlements, including closure for the company, enhanced legal certainty and the avoidance of unnecessary duplication, or undue burdens of disclosure. In addition, because the settlement announcements can occur on a single day, a company may be better able to control the release of information concerning the settlements and thereby limit the effect of any harmful disclosures on the market. There is a distinct trend toward more and more multi-agency settlements, as agencies increase collaboration, even across borders. Recently, the DOJ announced a new policy intended to intended to encourage coordination between it and other enforcement agencies and to discourage the disproportionate enforcement of laws by multiple authorities. Among other things, the new policy sets forth factors that DOJ attorneys may evaluate in determining whether multiple penalties serve the interests of justice in a particular case, including the egregiousness of the wrongdoing and the adequacy and timeliness of a company’s disclosures and co-operation. It remains to be seen to what degree this policy will result in meaningful changes to the DOJ’s approach to settling investigations involving multiple agencies.

24.6.2 Foreign authorities

Owing at least in part to the internationalisation of enforcement, the global nature of modern-day securities frauds, increased regulatory activity on the state level and the increased complexity of the markets, regulatory investigations today tend to involve a variety of authorities. Thus a corporation must carefully evaluate whether a settlement with certain authorities should be postponed until a global resolution can be reached. Coordinated global settlements often afford the company the opportunity to predict and prevent excessive, cumulative or unnecessary monetary penalties, continuing obligations and collateral consequences.

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