In our prior two posts, we’ve delved into the memorandum issued by the Head of the Department of Justice’s (Department) Criminal Division, Matthew R. Galeotti—"Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime[JH1] .” Those posts discussed the Focus and Fairness tenets in the Galeotti memorandum. In this post, we explore the final tenet—Efficiency. As Galeotti explains, the Efficiency tenet aims to maximize the Efficiency of Department investigations in order to minimize costs and intrusiveness and prevent unwarranted reputational damage to businesses. The Galeotti Memorandum identifies two main areas for improvement: the investigative process and use of corporate monitors. 

With respect to investigations, the Department’s goal of Efficiency is particularly targeted to the length of investigations. The Galeotti Memorandum notes that it is not unusual for white-collar investigations to go on for years. Galeotti instructs prosecutors to “take all reasonable steps” to move expeditiously in their investigations and reduce the “collateral impact of their investigations,” while acknowledging that white-collar schemes are often complex and take substantial time to unravel. The Criminal Division will exercise more oversight to track investigations and make sure they are “swiftly concluded.”

As for monitorships, the Galeotti Memorandum emphasizes that monitorships should only be imposed when necessary—namely, “when a company cannot be expected to implement an effective compliance program or prevent recurrence of” misconduct without external oversight. When monitorships are deemed appropriate, their mandates must be carefully scoped to minimize expense, burden, and business disruption. Further, the Department is reviewing all existing monitorships to determine whether they remain necessary.

The Galeotti Memorandum also references the Memorandum on Selection of Monitors in Criminal Division Matters, which updates the monitor selection process. The Department’s monitor memorandum updates the factors to be considered “when determining whether a monitor is appropriate” and ensures that monitorships are narrowly tailored “to address the risks of recurrence of the underlying criminal conduct” and avoid unnecessary expenses. The factors prosecutors should evaluate when deciding whether to impose a monitor are:

• The “[r]isk of recurrence of criminal conduct that significantly impacts U.S. interests,”
• The “[a]vailability and efficacy of other independent government oversight,”
• The “[e]fficacy of the compliance program and culture of compliance at the time of the resolution,” and
• The “[m]aturity of the company’s controls and its ability to independently test and update its compliance program.”

The monitor memorandum also walks through three steps the Criminal Division will take to ensure monitorships are properly tailored:

• The cost of a monitorship should be proportional to “the severity of the” criminal conduct at issue, the company’s profits, and “the company’s present size and risk profile.”
• The Criminal Division will have “at least biannual tri-partite meetings” with the monitor and company.
• The Criminal Division will work collaboratively with the monitor and company throughout the monitorship “to achieve a single goal: an appropriately tailored and effective, risk-based corporate compliance program designed to detect and prevent the recurrence of the misconduct underlying the agreement.”

The Galeotti Memorandum reaffirms that the new administration does not intend to get lax on white-collar crime within the areas it has targeted. That said, there will be shifts in how the government approaches various types of misconduct in the white-collar sector, and companies should carefully consider those changes as they develop their compliance program and evaluate how to address instances of misconduct in their operations.