On February 22, 2023, the United States Department of Justice (the “DOJ”) issued a Voluntary Self-Disclosure Policy for corporate criminal enforcement (“the Policy”), which applies to all United States Attorney’s Offices, effective immediately. The Policy follows the directives of Deputy Attorney General Lisa Monaco’s September 2022 memorandum, which instructed each component of the DOJ that prosecutes corporate crime to draft formal written policies incentivizing voluntary self-disclosure (“VSD”). The press release accompanying the Policy explains “[t]he goal . . . is to standardize how VSDs are defined and credited by USAOs nationwide, and to incentivize companies to maintain effective compliance programs capable of identifying misconduct, expeditiously and voluntarily disclose and remediate misconduct, and cooperate fully with the government in corporate criminal investigations.”  

The Policy provides tangible VSD benefits when companies become aware of misconduct by their employees or agents before the misconduct is publicly reported or otherwise known to the DOJ and discloses all relevant facts known to the company about the misconduct to a United States Attorney’s Office (“USAO”) in a timely fashion prior to an imminent threat of disclosure or government investigation. The Policy emphasizes the importance of disclosure so that the government can “investigate and hold wrongdoers accountable more quickly than would otherwise be the case.” Companies are instructed to make such disclosures regardless of whether they believe the government could already be aware of the misconduct.

Standards for VSD

Each USAO shall determine whether a disclosure constitutes a VSD on a case-by-case basis, but the Policy establishes the following criteria:

• Voluntariness: A disclosure must be truly voluntary and will not be deemed a VSD where the company has a pre-existing duty to disclose, whether by regulation, contract, or prior resolution with the DOJ.

• Timing: Disclosures must be made prior to an imminent threat of disclosure/government investigation, prior to the misconduct being publicly disclosed or otherwise known to the government, and “within a reasonably prompt time” after the company learns of the misconduct. Reasonable promptness is not defined by the Policy, but it is the company’s burden to demonstrate timeliness.

• Substance of the Disclosure and Accompanying Actions: To be deemed a VSD, a disclosure must include all relevant facts known to the company at the time it discloses.  Companies are expected to work swiftly to preserve, collect, and produce relevant information, in addition to providing timely factual updates to the DOJ (including factual updates that stem from internal investigations).

The Policy further notes that prompt self-disclosures “will be considered favorably” even if they do not satisfy all of these criteria.

Benefits Available for Meeting the VSD Standards

To promote compliance, the Policy offers tangible benefits to those who meet its requirements, which are consistent with the incentives outlined in Assistant Attorney General Polite’s January 2023 revisions to the Criminal Division’s Corporate Enforcement Policy (the “CEP”). We performed an in-depth analysis of the updated CEP earlier this month, which can be reviewed here.

The Policy states that absent aggravating factors, USAOs will not pursue a guilty plea when the company voluntarily self-discloses in accordance with the requirements set forth above, fully cooperates, and timely and appropriately remediates.^[1] The Policy identifies three aggravating factors: misconduct that poses a grave threat to national security, public health, or the environment; is deeply pervasive throughout the company; or involved current executive management of the company. The presence of an aggravating factor does not necessarily require a guilty plea and such cases will be evaluated on an individual basis.  

Where a company fully satisfies the Policy’s self-disclosure standards, the USAO may choose not to impose any criminal penalty, and even if a criminal penalty is warranted, it will not impose a penalty which is greater than 50% below the low end of the U.S. Sentencing Guidelines (the “U.S.S.G.”) fine range.

If the presence of an aggravating factor warrants a guilty plea for a company that voluntarily self-discloses, fully cooperates, and timely and appropriately remediates, the USAO will recommend a 50-75% reduction off the low end of the U.S.S.G. fine range after other potentially applicable reductions enumerated in the Policy. Furthermore, the USAO will not require appointment of an independent compliance monitor where the company demonstrates it has implemented and tested an effective compliance program at the time of resolution. 

Key Takeaways

• DOJ guidance under the Biden administration has been clear: companies are incentivized to self-disclose their misconduct—voluntarily, promptly, and comprehensively based on available information.

• This Policy creates the strongest presumption yet that a company that complies with all VSD requirements will not be criminally prosecuted. But the presumption is not absolute and USAOs retain considerable discretion in applying the Policy and evaluating compliance.

• Whether more companies will choose to take advantage of the benefits outlined in this Policy remains to be seen. However, companies need effective compliance programs that identify misconduct as early as possible in order to avail themselves of VSD.

• When misconduct is discovered, the risks and rewards of VSD should be considered expeditiously so that the availability of all benefits is preserved. 

FOOTNOTES

^[1] Separately, the Policy notes that to meet its standards, an appropriate remediation “must include, but is not necessarily limited to, the company agreeing to pay all disgorgement, forfeiture, and restitution resulting from the misconduct at issue.”