On May 9, 2018, Deputy Attorney General Rod Rosenstein announced a new policy that could have important consequences for corporate enforcement actions where penalties are imposed by more than one regulator or law enforcement authority.1
The new policy encourages coordination of corporate resolution penalties in such cases, with a goal of reducing duplicative fines and penalties, which Rosenstein referred to as “piling on.” Rosenstein announced the policy at the New York City Bar White Collar Crime Institute, and it has been added to the U.S. Attorneys’ Manual (USAM) at Section 1-12.100.2
In announcing the policy, Rosenstein emphasized the Department of Justice’s (DOJ) commitment to fairness and concern that amidst growing cross-border and cross-agency enforcement efforts, companies are facing redundant and sometimes “disproportionate” penalties imposed by multiple authorities. By encouraging greater cooperation in this area, Rosenstein noted, authorities will be able to “achieve reasonable and proportionate outcomes in major corporate investigations.”
Rosenstein underscored the importance and strength of the DOJ’s working relationships with law enforcement agencies and regulators in the U.S. and abroad, which have allowed for better detection and punishment of wrongdoing. He emphasized that the new policy was designed to enhance those relationships and cooperation in the penalty phase.
The new policy has four key features:
- It reaffirms the principle that “the federal government’s criminal enforcement authority should not be used … for purposes unrelated to the investigation and prosecution of a possible crime.” This includes using “the threat of criminal prosecution solely to persuade a company to pay a larger settlement in a civil case.” Rosenstein noted that this is not a policy change but rather “a reminder of and commitment to principles of fairness and the rule of law.”
- In cases where attorneys from different parts of the DOJ may be seeking to resolve a corporate case based on the same misconduct, it directs them to coordinate to “achieve an overall equitable result.” This may include “crediting and apportionment of financial penalties, fines and forfeitures.”
- It encourages DOJ attorneys, “when possible, to coordinate with other federal, state, local and foreign enforcement authorities seeking to resolve a case with a company for the same misconduct.”
- Finally, it sets forth certain factors that DOJ attorneys “may evaluate in determining whether multiple penalties serve the interests of justice in a particular case.”
While emphasizing the need for cooperation and the importance of fairness, however, Rosenstein also made clear that there are times when duplicative penalties “really are essential to achieve justice and protect the public,” and that in those cases, DOJ “will not hesitate to pursue complete remedies and to assist our law enforcement partners in doing the same.” Rosenstein also noted that cooperating with a foreign government “is not a substitute for cooperating with the Department of Justice” and cautioned companies against coming to the DOJ “only after making inadequate disclosures to secure lenient penalties with other agencies or foreign governments.” The written policy itself allows DOJ attorneys to “[consider] additional remedies in appropriate circumstances.” Thus, while the new policy is meant to promote fairness and cooperation, it should not be read as a move toward greater leniency.
As part of this effort, Rosenstein also announced the creation of a Working Group on Corporate Enforcement and Accountability within DOJ, which includes DOJ leaders and senior officials from the FBI, the Criminal Division, the Civil Division, other litigating divisions involved in significant corporate investigations, and the U.S. Attorney’s Offices. Rosenstein explained that the group “will make internal recommendations about white collar crime, corporate compliance and related issues.”
As with any new DOJ guidance, the policy’s ultimate impact will depend on how it is applied. The policy itself, as set forth in the USAM, provides only high-level guidance. It is also non-binding. The policy’s effectiveness will further depend on cooperation from other U.S. and foreign authorities. If well implemented, however, it could lead to fairer and more reasonable outcomes for companies facing multiple parallel criminal and/or regulatory enforcement actions. And the policy certainly provides companies with a basis to argue for them.
1 See https://www.justice.gov/opa/speech/file/1061186/download
2 See https://www.justice.gov/opa/speech/deputy-attorney-general-rod-rosenstein-delivers-remarks-new-york-city-bar-white-collar
Sidley Austin LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers.
Attorney Advertising—Sidley Austin LLP, One South Dearborn, Chicago, IL 60603. +1 312 853 7000. Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships, as explained at www.sidley.com/disclaimer.
© Sidley Austin LLP