Companies that voluntarily report wrongdoing to US prosecutors could be spared criminal penalties, the chiefs of the Department of Justice’s main New York branches said on Wednesday, in an attempt to entice early disclosures amid a steady decline in white-collar prosecutions.
Damian Williams and Breon Peace, the US attorneys for the southern and eastern districts of New York respectively, whose offices prosecute many significant corporate crimes in the US, said that fully co-operative companies will receive “significant benefits” and would generally not be forced to enter a guilty plea or have an independent monitor installed to ensure compliance.
In the absence of “aggravating factors” such as misconduct that poses a grave threat to national security or public health, or “deeply pervasive” crimes, corporations could expect at least 50 per cent and as much as a 75 per cent discount on any penalties imposed, the offices added.
The broad outlines of the five-page policy, effective from Wednesday, were included in a speech in September 2022 by deputy attorney-general Lisa Monaco, who emphasised how the Department of Justice was prioritising the prosecution of individuals over corporations.
After calls for clarity, the DoJ’s main New York offices said that the conduct disclosed should not have been publicly reported or already known to prosecutors, and must be made within “a reasonably prompt time”.
“We hope and expect that companies, as good corporate citizens, will take advantage of this new policy to report criminal misconduct by employees and agents when they become aware of it, so that individual wrongdoers can be held accountable,” Peace said.
The new policy comes weeks after researchers at Syracuse University found that the DoJ’s prosecution of white-collar offenders in 2022 reached the lowest point since the Reagan administration, and that the majority of referrals to the DoJ regarding white-collar offences did not result in prosecution.
The DoJ has previously disputed the Syracuse researchers’ methodology.
While emphasising that companies, not individuals, would be the beneficiaries of any early-disclosure benefits, the US attorneys’ offices said there was no point at which it would be too early to alert them to suspected wrongdoing.
“You should be calling us before we call you,” said one senior official at the US attorney’s office for southern district of New York, whose jurisdiction includes Wall Street and which is currently prosecuting the criminal case against FTX founder Sam Bankman-Fried.
“Don’t do a year of internal investigation and then come to us,” they added.
The official cited Allianz, which paid $6bn in a settlement with the DoJ last year after its investment arm pleaded guilty to securities fraud, as an example of a company that was dealt with harshly after failing to disclose misconduct in a timely manner.
