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DOJ May Rely on FCPA Policy in Resolving Securities and Financial Fraud Cases
By Investigations and White Collar Defense Group
On March 1, 2018, John Cronan, Acting Assistant Attorney General for the Criminal Division of the U.S. Department of Justice (the “DOJ”), and Benjamin Singer, Chief of the Securities and Financial Fraud Unit of the DOJ Fraud Section, announced that the DOJ will use the Foreign Corrupt Practices Act Corporate Enforcement Policy (the “FCPA Policy”) as nonbinding guidance in non-FCPA criminal cases. According to Cronan, the DOJ wishes that this guidance will encourage approaches and principles similar to the FCPA Policy for all securities and financial fraud cases.
The FCPA Corporate Enforcement Policy
The FCPA Policy was introduced and incorporated into the United States Attorneys’ Manual (“USAM”) on November 29, 2017. Most notably, the FCPA Policy includes a presumption that the DOJ will decline to prosecute a company that has “voluntarily self-disclosed misconduct in an FCPA matter, fully cooperated and timely and appropriately remediated.”
The presumption may not apply when there are aggravating circumstances that warrant a criminal resolution, such as pervasiveness and management involvement in the misconduct, significant profits from the misconduct, and prior wrongdoing by the company. However, despite such aggravating circumstances, a company that is not a repeat offender and that has self-disclosed, cooperated and remediated will receive some cooperation credit. The Policy indicates that for such cases, the DOJ will recommend a 50% reduction of the low end of the fine range under the U.S. Sentencing Guidelines and generally will not require appointment of a monitor if the company has an effective compliance program.
Moreover, companies that meet some but not all criteria listed in the FCPA Policy may be still rewarded with cooperation credit.
Potential Impact of Applying the FCPA Policy to Non-FCPA Cases
The DOJ’s “Principles of Federal Prosecution of Business Organizations” (the “Principles”) historically have provided guidance for corporate criminal cases.
the seriousness of the offense including risk of harm to the public,
pervasiveness and management involvement in the misconduct,
the company’s history of misconduct, collateral consequences to shareholders,
employees or the public, and
the adequacy of civil enforcement actions and individual prosecutions relating to the misconduct.
However, unlike the FCPA Policy, the Principles do not explain when a declination is appropriate or warranted. Instead, the Principles only describe factors that should be considered when determining whether a company is eligible for cooperation credit that could result in resolutions for cases that the DOJ would deem appropriate for indictment or prosecution.
If the DOJ views the FCPA Policy as guidance for all criminal securities and financial fraud cases, corporations under investigation by the DOJ might look to the FCPA Policy to help determine whether, when and how they should cooperate, disclose and remediate. Indeed, the FCPA Policy’s clarifications related to declinations and application of cooperation credit could help corporations navigate potential negotiations with the DOJ.
However, the DOJ has not formally announced that it would, in fact, adopt the FCPA Policy for all criminal securities and financial investigations. Accordingly, it remains to be seen how this recent statement by Cronan and Singer will impact DOJ resolutions with corporations in non-FCPA cases going forward. Unless and until the DOJ firmly and formally adopts a policy, corporations should certainly consider this announcement in their calculus regarding self-disclosure, with the understanding that it might not necessarily override other factors also being considered. It should also be noted that this announcement does not affect non-DOJ matters, such as civil or regulatory inquiries, enforcement actions or sanctions.