On May 9, 2018, in speech before the New York City Bar White Collar Crime Institute, Deputy Attorney General Rod Rosenstein stated the US Department of Justice (DOJ) will implement a new policy to discourage multiple regulators from “piling on” penalties. This policy will be effected through “coordination among Department components and other enforcement agencies.” Rosenstein also pointed to a renewed focus on deterrence through enforcement against individual wrongdoers and announced the establishment of a new Working Group on Corporate Enforcement and Accountability.
The DOJ’s New Policy
Rosenstein explained that the new policy is rooted in the belief that companies’ vulnerability to punishment from multiple enforcement agencies creates “a risk of repeated punishments that may exceed what is necessary to rectify the harm and deter future violations.” Rosenstein acknowledged that such “piling on” can deprive companies “of the benefits of certainty and finality” that comes from a full and final DOJ settlement.
The new policy seeks to increase the level of certainty that comes from a DOJ settlement and has four main components:
- Affirmation of Pre-existing DOJ Policy – Rosenstein reaffirmed the DOJ’s policy against using a criminal enforcement action for purposes unrelated to the investigation and the prosecution of a possible crime. He explained that federal prosecutors “should not employ the threat of criminal prosecution solely to persuade a company to pay a larger settlement in a civil case.”
- Coordination Among DOJ Lawyers – The new policy directs DOJ lawyers in different components to coordinate for purposes of achieving an “overall equitable result.” Such coordination may include “crediting and apportionment of financial penalties, fines and forfeitures, and other means of avoiding disproportionate punishment.”
- Coordination With Other Enforcement Authorities – The new policy encourages DOJ lawyers, “when possible, to coordinate with other federal, state, local, and foreign authorities seeking to resolve a case with a company for the same misconduct.” Rosenstein emphasized the benefits of close cooperation with foreign enforcement authorities, and announced that the Attorney General has assigned additional resources to the DOJ’s Office of International Affairs.
- Factors to Consider When Evaluating Multiple Penalties – The new policy sets forth factors that DOJ lawyers may evaluate when “determining whether multiple penalties serve the interests of justice in a particular case.” Factors to consider include “egregiousness of the wrongdoing; statutory mandates regarding penalties; the risk of delay in finalizing a resolution; and the adequacy and timeliness of a company’s disclosures and cooperation with the Department.”
This new policy will be incorporated in the US Attorneys’ Manual, but it will serve only as a guide. Rosenstein cautioned that the new policy “provides no private right of action and is not enforceable in court.” Rosenstein also cautioned that the new policy does not recognize cooperation with a different agency as a substitute for cooperation with the DOJ. If companies make inadequate disclosures to other agencies or governments in an effort to secure a lenient penalty, the DOJ “will act without hesitation to fully vindicate the interests of the United States.”
Moreover, as a recent decision by the Supreme Court of France makes clear, unless foreign enforcement agencies adopt similar policies, companies may still be at risk of being “piled on” with penalties after entering into a settlement with the DOJ. On March 14, 2018, the French Supreme Court rejected the application of the “double jeopardy” defense under Article 14(7) of the International Covenant on Civil and Political Rights, and ruled that French authorities could fine the company even though it had previously entered into a plea agreement in New York in connection with the same conduct. This ruling leaves open the very real possibility that companies might still face cumulative penalties in several jurisdictions.
Other Matters Discussed by Rosenstein
During his remarks, Rosenstein also suggested that the new DOJ policy would result in a renewed focus on pursuing enforcement actions against individuals. “Piling on” is not an effective deterrent because it does not tend to affect the decisions of individual actors within those corporations. Thus, the DOJ’s “goal in every case should be to make the next violation less likely to occur by punishing individual wrongdoers.”
Rosenstein also announced the establishment of the Working Group on Corporate Enforcement and Accountability. He did not name the members of the group, but stated that membership would include DOJ leaders and senior officials from the US Attorney’s Offices and various divisions within the DOJ, as well as from the FBI. The group “will make internal recommendations about white collar crime, corporate compliance, and related issues.”
Takeaway and Looking Forward
Companies subject to enforcement actions by foreign governments or agencies other than the DOJ should take steps to ensure that they are in a position to take advantage of the new DOJ policy. Depending on the circumstances, companies may take proactive measures to encourage DOJ involvement in or monitoring of an investigation by another agency or foreign government. Such cooperation may reduce the chances of any misunderstanding about the scope of a particular enforcement action, and thus reduce the chances of any “piling on” of penalties. When faced with an enforcement action, companies should work with their legal advisors to develop a comprehensive strategy that anticipates the DOJ’s potential interest in the conduct at issue, and avoids any action that would discourage the DOJ from applying the new policy to that conduct.