Vedder Price

Deputy Attorney General Lisa Monaco and Assistant Attorney General Kenneth Polite, Jr. both delivered keynote speeches at the conference. Their remarks focused largely on the DOJ’s endeavors to incentivize corporate compliance and also referenced department successes, goals and the necessity for working closely with both national and international partners. Additionally, they both highlighted recent significant changes in DOJ policies.

Increased Incentives for Self-Disclosure

Both Monaco and Polite addressed the stepped-up efforts to curb corporate misconduct embodied in the DOJ’s January 17, 2023 change to its Corporate Enforcement Policy (CEP) as well as the United States Attorneys’ Offices (USAO) Voluntary Self-Disclosure Policy released on February 24, 2023. The CEP, which applies to all corporate criminal matters handled by the Criminal Division, and the USAO Policy, which applies to all USAOs nationwide, creates new incentives to entice corporations to voluntarily self-disclose misconduct. For example, if a corporation voluntarily self-discloses, cooperates with prosecutors and remediates, there will be a presumption of declination absent aggravating circumstances. Additionally, even where there are aggravating circumstances that would eliminate the presumption,¹ prosecutors may determine that a declination is still appropriate if the corporation (1) “immediately” self-discloses misconduct, (2) had a robust compliance program at the time of the misconduct and (3) engages in “extraordinary” cooperation and remediation efforts.  

Despite emphasizing the importance of “immediate” self-disclosure and “extraordinary” efforts to cooperate with the government, neither Monaco nor Polite offered any guidance as to how the DOJ would evaluate whether a corporation met those standards. Nonetheless, both warned that failure to satisfy these factors may result in more severe consequences. 

New Pilot Program for Corporate Compensation

Monaco and Polite also addressed the DOJ’s new three-year pilot program regarding corporate compensation incentives and clawbacks. Under the pilot program, the DOJ will require companies, prior to any resolution with the criminal division, to enact compensation and bonus programs that incentivize compliance and impose concrete penalties on the wrongdoers within the company.  

Further, Monaco and Polite both stated that in order to encourage compliance, companies being prosecuted will receive reduced fines if they enact compliance programs with compensation clawbacks for executives and non-executive employees found responsible for wrongdoing.  Companies that seek to claw back compensation from corporate wrongdoers may obtain a reduction in penalties and fines. Monaco and Polite acknowledged the challenges associated with seeking to claw back compensation from a wrongdoer and noted that if a company has made good-faith attempts to claw back compensation but is unsuccessful, it would still be eligible to receive a fine reduction up to 25 percent of the amount of compensation the company attempted to claw back.  

Significant Changes to ECCP

Building on the comments regarding the new CEP, Polite also reported changes to the criteria set forth in the Evaluation of Corporate Compliance Programs (ECCP), which is a set of guidelines the DOJ uses to assist in making decisions relating to prosecuting corporations. As part of the new ECCP revisions, the DOJ will now take into account a corporation’s consequence management procedures (meaning the procedures in place to identify, investigate and remediate violations) and whether the corporation is tracking data relating to disciplinary actions to determine the efficacy and deterrence impact amongst its employees. Additionally, the DOJ will now consider whether a corporation’s compensation structure incentivizes compliance and disincentivizes risky behavior.  

Another new provision relates to a corporation’s policies and procedures regarding the use of personal devices, communications platforms, and messaging applications, with a particular focus on ephemeral messaging applications.  As part of its new criteria, the DOJ will consider whether a corporation’s policies and procedures are appropriately tailored to ensure that all business-related data is preserved.  

Emphasis on DEI and Community

Additionally, Polite discussed the DOJ’s March 1, 2023 revised memorandum clarifying how monitors are selected, along with articulating and clarifying the conflict of interest obligations associated with serving as a lead monitor or part of a monitor team. He highlighted that the submission and selection of a monitor candidate should be made with the DOJ’s commitment to diversity, equity and inclusion in mind.

Polite’s remarks also referenced the DOJ’s community-based problem-solving approach. Specifically, he noted that protecting the community requires more than simply prosecuting crime. Instead, it requires working towards preventing the problems from occurring in the first place. Polite believes this can be done by (1) proactive and sophisticated methods of identifying criminal wrongdoing, (2) collaboration across governmental departments, (3) working with both domestic and international partners, (4)  focusing on the prosecution of righteous cases, (5) refining policies and (6) providing transparency on expectations and consequences.