Announcement of Policy Revisions Reflects a More Practical, Flexible Enforcement Approach

The US Justice Department has adjusted its approach to holding individuals, and not only corporations, responsible for improper conduct. In remarks at the ACI’s FCPA conference on November 29, Deputy Attorney General Rod Rosenstein softened the DOJ’s formal policy on what information corporations are required to provide on individuals in order to receive credit in FCPA cases.

Rosenstein has effectively amended the Yates Memo, issued by Deputy Attorney General Sally Yates in 2015, which required companies to provide the DOJ with all relevant facts regarding individuals involved in corporate misconduct. This change follows Rosenstein’s announcement in September 2017 that the Yates Memo was under review within the DOJ.

Under the DOJ’s revised approach to criminal enforcement, the focus is now on “the individuals who play significant roles in setting a company on a course of criminal conduct.” In place of the previous requirement to share information on every employee with any role in misconduct, regardless of culpability, the revised policy requires companies to share specific information about individuals who authorized misconduct and what knowledge these individuals had. Rosenstein made it clear that, except in extraordinary circumstances, no corporation resolution should shield individual wrongdoers from the consequences of criminal actions. For criminal prosecutions, this remains consistent with the Yates Memo.

The DOJ’s retreat from the previous policy is a practical move, reflecting the actual approach of prosecutors in FCPA cases today. The revised approach aims to enable prosecutors to take a more flexible approach and avoid unnecessarily dragging out corporate resolutions. While good-faith cooperation with this policy is necessary for corporations to receive cooperation credit in the criminal context, the shift in focus back to individuals who are “substantially involved in or responsible for criminal conduct” allows companies to focus DOJ cooperation efforts on actors who played significant roles in misconduct.

This policy change is already codified at Section 9-28.700 of the Department of Justice Manual, which was amended in November 2018. The new Section 9-28.700 requires companies to identify everyone substantially involved in or responsible for misconduct and, further, requires companies to disclose all relevant facts about these individuals’ conduct. The amended policy simultaneously allows, however, that “there may be circumstances where, despite its best efforts to conduct a thorough investigation, a company genuinely cannot get access to certain evidence or is legally prohibited from disclosing it to the government.” Under these situations, “the company seeking cooperation will bear the burden of explaining the restrictions it is facing to the prosecutor.” Rosenstein’s remarks simply highlight this change to the Justice Manual.

With respect to providing information to DOJ on individuals in the civil context, Rosenstein announced a more substantial change to the Department’s previous all-or-nothing approach to cooperation credit. The new approach is graduated, and a restoration of discretion traditionally exercised by prosecutors in assigning cooperation credit. To receive any civil cooperation credit, a company must identify all senior officials who engaged in wrongdoing. To receive maximum cooperation credit, the company must identify all individuals who were substantially involved in or responsible for wrongdoing. Finally, if a company meaningfully assists the government investigation, civil prosecutors have the discretion to provide some level of cooperation credit.

This principle behind this change in approach with respect to information about individuals was also codified by a recent amendment to the Justice Manual. Section 4-3.100 of the revised Manual requires only “meaningful assistance” with government investigations, and specifies that, for “maximum cooperation credit, a corporation must do a timely self-analysis and be proactive in voluntarily disclosing wrongdoing and identifying all individuals substantially involved in or responsible for the misconduct.”

Finally, Rosenstein emphasized that DOJ attorneys are being given additional discretion in civil matters. They can negotiate civil releases, with supervisory approval, for individuals who do not need to remain involved in corporate investigations. This is a departure from the Yates Memo, which had required individual prosecutions except under extraordinary circumstances. In an effort to steward government resources, the DOJ has also restored prosecutorial ability to consider an individual’s ability to pay when determining whether to pursue a civil enforcement action. As Rosenstein recognized, this is also a practical change in approach, as civil cases are largely focused on financial recovery.

Rosenstein’s address emphasized a continued focus on individual accountability, and it is not clear that the new approach would result in fewer individual prosecutions. The announced policy changes reflect DOJ’s desire to enable efficient disposition of cases before the Department and are consistent with other recent DOJ statements reflecting a more practical and flexible (while still rigorous) approach to cases of corporate misconduct. The policy changes should not change how companies respond to potential improper conduct, which should continue to be promptly and thoroughly investigated and remediated.