Yesterday, in remarks made at the 34th International Conference on the FCPA, Deputy Attorney General Rod J. Rosenstein recognized the success of the FCPA Pilot Program and announced a revised FCPA Corporate Enforcement Policy geared at “increas[ing] the volume of voluntary disclosures” and “enhanc[ing] the [DOJ’s] ability to identify and punish culpable individuals.” A transcript of Mr. Rosenstein’s remarks can be found here.
Most importantly, the policy – which has been formally incorporated into the United States Attorneys’ Manual and is limited to FCPA cases – creates the presumption that a company meeting all standards relating to voluntary self-disclosure, full cooperation, and timely and appropriate remediation will have their case resolved through a declination “absent aggravating circumstances involving the seriousness of the offense or the nature of the offender.” Under the policy, aggravating circumstances include (but are not limited to):
– Executive level involvement in the misconduct;
– Significant profits to the company resulting from the misconduct;
– Pervasiveness of the misconduct; and
– Criminal recidivism.
Even where such aggravating factors may exist, however, companies that voluntarily self-disclose and have fully cooperated are eligible to receive up to a recommended 50% reduction off of the lower end of the US Sentencing Guidelines (“U.S.S.G.”) fine range (except in cases involving criminal recidivism) and “generally will not require appointment of a monitor” (to the extent a company has already implemented an effective compliance program when a resolution is reached). Where a company has fully cooperated but did not voluntarily disclose misconduct, they may still be eligible for up to a 25% reduction off of the lower end of the U.S.S.G. fine range.
Companies will still be required to pay disgorgement, forfeiture, or restitution under the new policy, even where they have made a voluntary disclosure and have fully cooperated with enforcement authorities. These payment requirements may be satisfied by a parallel resolution with a relevant regulator, such as the SEC.
The new policy is clearly designed to further incentivize voluntary disclosure. It also provides helpful guidance on steps companies must take in order to qualify for voluntary self-disclosure, as well as relevant factors in evaluating a company’s full cooperation and timely and appropriate remediation. Notably, the elements of “full cooperation” outlined in the new policy (which is largely based on the Yates memorandum) are “in addition to” those outlined in the current Principles of Federal Prosecution of Business Organizations and include, among other requirements, the disclosure of overseas documents and facilitation of third-party production of documents and witnesses. Furthermore, although the definition of appropriate remediation broadly echoes past guidance on the development and implementation of effective compliance programs they represent a more fulsome explication of what the Department is looking for and reflect some new and significant elements. For example, they require that companies “prohibit employees from using software that generates but does not appropriately retain business records or communications.”
While the announcement is likely to generate a deal of excitement given that it paves the path forward to generate a “presumption that the company will receive a declination,” we caution that a presumption may nonetheless, under certain circumstances, be overcome. The scope of prosecutorial discretion in determining whether any of the broadly-stated aggravating circumstances may apply, and whether a company has met its burden in demonstrating that it has made a voluntary self-disclosure, has fully cooperated, and has taken timely and appropriate steps to remediate the misconduct remains unclear. It should also be noted that declinations will be made public. Thus, while the new policy offers a potentially significant benefit, the voluntary disclosure decision will likely still be one that requires careful weighing, as today more than ever, the company will be opening itself up to scrutiny from multiple quarters.