The Corporate Cops Are Back in Town: DAG Monaco Announces Major Changes to Corporate Misconduct at ABA WCC Conference

Delivering the ABA White Collar Crime Conference’s (ordinarily annual) E. Lawrence Barcella, Jr. Memorial Address, Deputy Attorney General (DAG) Lisa Monaco made a “major announcement” of three new actions DOJ’s taking to beef up its fight against corporate crime:

1. Individual Wrongdoing: In a big break with prior DOJ policy, corporations now will receive no cooperation credit unless they identify, and provide all non-privileged information about, all individuals involved in the alleged misconduct—not just those employees who are “substantially” involved. This requirement reinstates prior DOJ policy and withdraws the memo that former DAG Rod Rosenstein issued in November 2018. Monaco explained that individuals with a peripheral role often have information whose significance is apparent only to the investigators.
2. History of Corporate Misconduct: When assessing appropriate sanctions or resolutions, DOJ prosecutors now must take into account all of the corporation’s previous misconduct, regardless of its similarity to the conduct under investigation. DOJ’s Principles of Federal Prosecution of Business Organizations now will make clear that a corporation’s full record of criminal, civil, and regulatory violations will be relevant in every outcome.
3. Monitors: DAG Monaco is rescinding guidance suggesting that corporate monitors are disfavored. Emphasizing that every resolution with a company naturally involves a significant amount of trust by the Department, she nevertheless will direct prosecutors to require monitors whenever appropriate to satisfy DOJ that corporations are complying with their obligations under deferred prosecution or non-prosecution agreements.

She also promised more. The Attorney General and Monaco are establishing a corporate crime advisory group comprised of pertinent DOJ stakeholders. That group, whose composition she didn’t identify, will address other issues, such as whether an NPA or DPA is appropriate for entities with repeat misconduct and how to treat corporations that breach such agreements. She also explicitly invited the white-collar defense bar to provide its own input, although she didn’t describe the forum for doing so.

These policies all emanate from the AG’s and the DAG’s view that DOJ can do more, and do what it is already doing more aggressively, to incentivize corporations to behave ethically and lawfully, to police themselves accordingly, and to deter misconduct. That goal, of course, is laudatory.

But the new policies also pose real questions and real risks. How will prosecutors determine whether a corporation has identified everyone involved in or with knowledge of wrongdoing? Is there any room left in the system for a corporation to get cooperation credit while maintaining that the underlying conduct wasn’t illegal in the first place? How will DOJ treat a prior enforcement history in which corporations resolved matters without admissions of wrongdoing? And how much will these new requirements cost a corporation doing its best to cooperate?

We’ll be blogging about these and other issues soon. Stay tuned.

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.