As we have previously written, the 2015 directive, colloquially known as the “Yates Memo,” refocused the Department of Justice (“DOJ”) investigations and prosecutions on holding individual directors and officers criminally responsible for the misdeeds of a corporation, a dramatic departure from prior practices of levying huge fines on corporations, but leaving the individual directors or officers unscathed. The question naturally arises: will the new administration continue down this same path?  

On January 30, 2017, President Trump fired acting Attorney General Sally Yates, an Obama appointee, after her directive to DOJ lawyers not to defend the new President’s Executive Orders. With Yates gone, will the memo that has shaken corporate America that bears her name go as well? Only time will tell what newly appointed Attorney General Jeff Sessions will do but, at present, all evidence indicates that the Yates Memo is here to stay.  

During his confirmation hearing, in response to a question from Senator Mazie Hirono (D-Hawaii), Sessions stated that “[s]ometimes . . . the corporate officers who caused the problem should be subjected to more severe punishment than the stockholders of the company who didn't know anything about it.” Then-nominee Sessions’ answer indicates a clear agreement with the philosophy behind the Yates Memo. Indeed, Sally Yates herself stated on November 30, 2016, in her first postelection speech, that “individual accountability isn’t a democratic principle or a republican principal, but is instead a core value of our criminal justice system that perseveres regardless of which party is in power.”

It is also consistent with Jeff Sessions’ history, both as a prosecutor and as a member of the Senate Judiciary Committee. While widely recognized as a conservative friend to big business, his strict adherence to law and order could spell disaster for businesses and businessmen who step over the line. As a federal prosecutor, he went after bankers related to the 1980’s savings and loan crisis and has been quoted as saying that the bankers he went after “lost everything they had.” 

As a senator, Sessions has been known to compare white-collar offenders to drug dealers and can be expected to push for more indictments and prison sentences for directors and officers. During the 2010 confirmation hearing for James Cole, who Obama had nominated as Deputy Attorney General, Sessions questioned Cole on the philosophy of declining charges where there were concerns that it would lead to bankruptcy and hurt employees and shareholders. Sessions rejected these external considerations and opined that, “…if they violated a law, you charge them. If they didn’t violate the law, you don’t charge them.” 

Further, in a 2007 hearing on DOJ methods of pressuring corporations to waive attorney-client privilege -- which would necessarily expose the directors and officers to a substantially higher risk of jail time -- Sessions stated that corporate crime “is not easy to prosecute or investigate. They have the best lawyers that you can find, and they utilize all the legitimate tools that they have, and you have to be strong... a prosecutor cannot be a weak-kneed person going up against a major corporation in a fraud case.”  

With the anticipated continuation and perhaps strengthening of the provisions of the Yates Memo, it is more important than ever to make sure that the directors and officers are also protected by the best lawyers who will not be “weak-kneed” when going up against the Department of Justice.