As a preliminary matter, what is not changing is the Department’s pursuit of individuals involved in corporate fraud. “Under [the] revised policy, pursuing individuals responsible for wrongdoing will be a top priority in every corporate investigation.” But that has been the Department’s policy for many years. However, the Department knows that collecting information about the conduct of every individual involved in a course of corporate conduct was, if not impossible, the source of significant delay in many criminal cases. Thus, the revised policy acknowledges 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.” Instead, DOJ will focus “on the individuals who play significant roles in setting a company on a course of criminal conduct.” In particular, DOJ “want[s] to know who authorized the misconduct, and what they knew about it.” Under the revised policy, in order to qualify for “any cooperation credit” in criminal cases, companies now have to work “in good faith to identify individuals who were substantially involved in or responsible for wrongdoing,” and disclose that information to DOJ.
Recognizing that “civil cases are different,” Rosenstein announced more dramatic changes to the Yates Memo policy in that context. Specifically, companies are no longer expected to “admit the civil liability of every individual employee,” in order to qualify for cooperation credit – an expectation Rosenstein acknowledged is “inefficient and pointless in practice.” Instead, companies are expected to focus on identifying individuals who were “substantially involved in or responsible for the misconduct.” In particular, in order to qualify for any cooperation credit in a civil case, companies now “must identify all wrongdoing by senior officials, including members of senior management or the board of directors.”
Assuming information regarding wrongdoing by senior executives is disclosed, cooperation credit in the civil context is no longer an “all or nothing” proposition. Rather, DOJ attorneys now have the flexibility to offer “some credit even if the company does not qualify for maximum credit.” In his speech, Rosenstein outlined how this might be evaluated in the context of an FCA investigation:
“In a civil False Claims act case, for example, a company might make a voluntary disclosure and provide valuable assistance that justifies some credit even if the company is either unwilling to stipulate about which non-managerial employees are culpable, or eager to resolve the case without conducting a costly investigation to identify every individual who might face civil liability in theory, but in reality would not be sued personally. 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.”
In another departure from the Yates Memo, which prohibited providing individuals protection from criminal or civil liability “absent extraordinary circumstances,” the revised policy affords DOJ attorneys the ability to “negotiate civil releases for individuals who do not warrant additional investigation in corporate civil settlement agreements,” subject to routine supervisory approval.
The revised policy also changes the Yates Memo calculus regarding when to pursue individuals under the False Claims Act. Whereas the Yates Memo suggested that those decisions should not necessarily be limited by the individuals’ ability to pay, the revised policy makes clear that DOJ lawyers “are permitted to consider an individual’s ability to pay in deciding whether to pursue a civil judgment.”
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