Featured Expert Contributor, White Collar Crime & Corporate Compliance
Following an internal review of the Department of Justice’s policy concerning individual accountability in corporate cases, Deputy Attorney General Rod Rosenstein recently announced significant changes to the policy. Under the new policy, DOJ will treat civil cases differently than criminal cases when evaluating a corporation’s cooperation in an investigation. This change is a modification of the 2015 policy memo issued by then-Deputy Attorney General Sally Yates that required DOJ lawyers to investigate any individuals responsible for illegal corporate conduct before settling a case. The modified policy restores the discretion of DOJ attorneys in civil cases to approve settlements without investigating every individual corporate employee who might potentially be responsible for the illegal conduct.
The 2015 Yates memo warned corporate defendants as follows: “To be eligible for any cooperation credit, corporations must provide to the Department all relevant facts about the individuals involved in corporate misconduct.” This policy was generally interpreted as precluding a corporate defendant from receiving cooperation credit unless the company provided all of the evidence it possessed against virtually any corporate employee known or believed to have been involved in the subject’s conduct. The modified policy seems to reflect a reasonable narrowing of this requirement which that permit companies to focus on determining which employees were substantially involved in misconduct and focus on only those individuals.
This policy shift was the result of input from both DOJ prosecutors and outside stakeholders, something that Rosenstein was very transparent about during his recent announcement. While maintaining that the pursuit of individuals will continue to be a top priority in every corporate investigation, he observed that “the deterrent impact on the individual people responsible for wrongdoing is sometimes attenuated in corporate prosecutions.” Nevertheless, he emphasized the new policy clarifies that “investigations should not be delayed merely to collect information about individuals whose involvement was not substantial, and who are not likely to be prosecuted.”
Rosenstein also clarified that the new policy sees civil cases differently. “When criminal liability is not at issue, our attorneys need flexibility to accept settlements that remedy the harm and deter future violations so they can move on to other important cases. The idea that a company that engaged in a pattern of wrongdoing should always be required to admit the civil liability of every individual employee as well is attractive in theory, but it proved to be inefficient and pointless in practice.” The result of this recognition of the difference between the goals and realities of criminal and civil cases is that the revised policy affords a corporation maximum credit where it identifies every individual person who was substantially involved in or responsible for the misconduct. “So our attorneys may reward cooperation that meaningfully assisted the government’s civil investigation, without the need to agree about every employee with potential individual liability.”
The bottom line is that this new approach promises to provide more flexibility to both the government lawyers trying to determine how best to resolve corporate cases, and to the defense lawyers who are trying to determine which individuals within the corporation are truly culpable. This is, in theory, a positive development that seems to strike a reasonable balance.