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DOJ aims to incentivize voluntary self-disclosure

The Department of Justice (DOJ) has announced a new policy outlining the benefits a company may receive for voluntary self-disclosure (VSD) of criminal conduct.

A goal of the policy is to incentivize companies to come forward proactively when they discover internal misconduct.

The new Voluntary Self-Disclosure Policy sets a nationwide standard for how U.S. Attorney’s Offices (USAO) will determine whether a company has made a voluntary self-disclosure. It outlines the tangible benefits to a company that makes a VSD, cooperates, and remediates the conduct.

Benefits of VSD

Absent an aggravating factor, a company that is considered to have made a VSD would receive the following benefits:

  • The USAO will not seek a guilty plea.
  • The company could potentially avoid a criminal penalty. Ultimately, it will not receive a criminal penalty that is greater than 50% below the low end of the U.S. Sentence Guidelines fine range.
  • The USAO will not require a third-party compliance monitor.

Conditions of a voluntary disclosure

A company can qualify for VSD benefits if the following conditions are met:

  • It discloses facts of misconduct before such conduct is publicly reported other or otherwise known to the DOJ.
  • It discloses all known relevant facts in a timely matter, prior to a threat of disclosure or government investigation.
  • It fully cooperates and appropriately remediates the criminal conduct.

“The new Voluntary Self-Disclosure Policy is an important step forward in encouraging corporate accountability,” said U.S. Attorney Damian Williams in a statement. “This transparent and clearly delineated policy allows for more predictable outcomes, and seeks to incentivize corporations to do the right thing by reporting wrongdoing before detected by regulators and law enforcement. We hope that this new policy … leads to more companies getting ahead of financial malfeasance before authorities come to them.”

Aggravating factors

Under the VSD policy, the USAO may still seek a guilty plea if certain aggravating factors are present:

  • The misconduct poses a grave threat to national security, public health or the environment.
  • The misconduct is deeply pervasive throughout the company.
  • The misconduct involved the company’s current executive management.

However, per policy, the presence of an aggravating factor does not mean a guilty plea will necessarily be required. Rather, the USAO will consider the relevant facts and circumstances.

In the instance of an aggravating factor, the company can still receive benefits under the VSD policy, including a reduction (50-75%) off the low end of the USSG fine range. Likewise, the USAO will not require a third-party monitor if the company has implemented an effective compliance program.

Joint prosecution and implications

In instances when a company is being jointly prosecuted by another USAO or DOJ function, the offices will coordinate their approach to resolution. In these cases, the USAO reserves the right to apply any provisions of the coordinating offices’ own VSD standards.

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