On January 10, 2024, the US Attorney for the Southern District of New York (SDNY) announced a new whistleblower pilot program designed to encourage voluntary self-disclosure of certain, nonviolent criminal misconduct. In announcing the pilot program, US Attorney Damian Williams noted that SDNY seeks to “incentivize individuals and their counsel to provide actionable and timely information” regarding criminal misconduct. SDNY’s rollout of the Whistleblower Pilot Program follows several recent policy pronouncements by the US Department of Justice (DOJ) seeking to incentivize companies and individuals to voluntarily self-report misconduct in exchange for more lenient prosecution.

The announcement marks a significant departure from how SDNY has historically approached cooperation by those involved in criminal conduct and likely signals broader support within DOJ for extending to individuals programs that were previously aimed at corporate self-disclosure.

In Depth

WHISTLEBLOWER PILOT PROGRAM

Under the Whistleblower Pilot Program, SDNY will enter into a non-prosecution agreement (NPA) and agree not to prosecute an individual who discloses information regarding certain criminal misconduct and meets other program criteria. Specifically, the pilot program applies to conduct “undertaken by or through public or private companies, exchanges, financial institutions, investment advisers, or investment funds involving fraud or corporate control failures or affecting market integrity, or criminal conduct involving state or local bribery or fraud relating to federal, state or local funds.” In such cases, SDNY will offer an NPA in exchange for the whistleblower’s cooperation where all the following conditions are satisfied:

1. The misconduct is neither already public nor already known to federal prosecutors.
2. The self-disclosure is made voluntarily and not in response to a government inquiry or reporting obligation.
3. The whistleblower is able and prepared to provide substantial assistance and fully cooperate in the investigation and prosecution of “one or more equally or more culpable persons.”
4. The whistleblower truthfully and completely discloses all prior criminal conduct.
5. The whistleblower is not a federal, state or local official, law enforcement official or agent, a person who is (or is expected to become) of major public interest, or the chief executive officer, chief financial officer or equivalent of a public or private company.
6. The whistleblower has not engaged in any violent criminal conduct or any sex offense or offense involving terrorism or implicating national security and does not have any previously felony convictions or any convictions involving fraud or dishonesty.

Notably, while the pilot program targets misconduct involving fraud or corporate control failures or affecting market integrity, criminal conduct involving state or local bribery, and fraud relating to federal, state or local funds, the program does not extend to certain types of criminal misconduct, namely violations of the Foreign Corrupt Practices Act (FCPA), violations of federal or state campaign finance laws, federal patronage crimes, corruption of the electoral process or bribery of federal officials.

Where an individual whistleblower discloses information regarding such misconduct but does not satisfy the requirements outlined above, SDNY may nevertheless exercise its discretion to extend an NPA in exchange for the individual’s cooperation, subject to supervisory approval. In determining whether such an agreement is necessary and in the public interest in such circumstances, SDNY will consider the following, among other factors:

1. Whether the criminal conduct was already public or previously known to SDNY
2. Whether the whistleblower disclosed the criminal conduct voluntarily or in response to a government inquiry or reporting obligation
3. The extent of the whistleblower’s substantial assistance with SDNY’s investigation and prosecution of other culpable persons
4. Whether the whistleblower has truthfully and completely disclosed all criminal conduct
5. The extent to which the individual holds any official or leadership position or other position of public or private trust
6. The adequacy of noncriminal sanctions
7. The whistleblower’s criminal history.

KEY TAKEAWAYS

1. The Whistleblower Pilot Program offers eligible whistleblowers an enticing carrot: the ability to avoid criminal prosecution entirely, provided they meet the criteria set forth in the program announcement. Historically, SDNY has required all would-be cooperators, with very limited exceptions, to plead guilty to all criminal conduct as part of a cooperation agreement. Moreover, SDNY has signaled its willingness to offer an NPA to even those whistleblowers who fall short of strictly meeting all program requirements.
2. Implementation of the Whistleblower Pilot Program may reveal potential pitfalls, and those considering self-reporting should be aware of the inherent risks. For example, while the program by its terms applies only to those reporting criminal conduct unknown to SDNY, a potential whistleblower or her counsel may not know whether SDNY is already aware of information until after self-disclosure. Similarly, the program only applies to those reporting conduct involving “equally or more culpable persons,” a subjective standard as to which a prospective whistleblower and SDNY may not agree. Potential whistleblowers and their counsel should carefully consider these and related issues prior to making any decisions about voluntarily providing information to SDNY.
3. While it remains to be seen whether the Whistleblower Pilot Program will lead to additional voluntary self-disclosures, and in turn, criminal prosecutions, the pilot program is noteworthy as a first-of-its-kind attempt by a US attorney’s office to establish the sort of self-reporting incentives for individuals that have long been in place for corporations. Moreover, given SDNY’s stature within DOJ, other US attorneys’ offices nationwide are likely to watch carefully how SDNY’s program works in practice in determining whether to apply similar programs.