Sportsmanlike Conduct? DOJ Announces Policy to Avoid ‘Piling On’ Monetary Sanctions in Corporate Resolutions

On May 9, 2018, in remarks made at the American Conference Institute’s 20^th Anniversary New York Conference on the Foreign Corrupt Practices Act (FCPA) and to the New York City Bar White Collar Crime Institute, Deputy Attorney General (DAG) Rod Rosenstein announced two new policy initiatives at the US Department of Justice (DOJ). The first, a new “Policy on Coordination of Corporate Resolution Penalties” is intended to avoid the unfair assessment of duplicative fines and penalties – or “piling on”, in football terms – against companies which are subject to joint or parallel enforcement involving multiple US authorities and/or multiple jurisdictions, an issue for which the US government has received criticism in the past. In furtherance of that new policy, the DAG’s second announcement reported the advent of a working group on corporate enforcement designed to ensure consistency among DOJ-resolved white-collar criminal cases and resolutions.

These announcements are the latest in the ongoing evolution of the DOJ’s corporate and white-collar criminal enforcement efforts. FCPA, white-collar, and corporate criminal law enforcement has continued, much as under prior administrations, at a robust pace since the middle of 2017. On the other hand, DAG Rosenstein’s May 9 remarks continue the DOJ’s ongoing efforts to re-orient criminal enforcement towards individual prosecutions as the most effective way to deter white-collar crime, in part through greater transparency and certainty for companies as to the DOJ’s corporate enforcement policies.

The Policy on Coordination of Corporate Resolution Penalties

As with the DOJ’s Corporate Enforcement Policy, announced on November 29, 2017 (see our advisory on the Corporate Enforcement Policy), the substance of the new Policy on Coordination of Corporate Resolution Penalties is defined in a new section of the US Attorney’s Manual. As DAG Rosenstein pointed out in his prepared remarks, it was not issued as a stand-alone policy document that would colloquially be referred to using his name (i.e., a “Rosenstein Memo”), as had been done previously in the so-called Yates, Filip and other DAG-named memos.^[1]

The policy has four main elements:

• First, it reminds DOJ attorneys “not to use criminal enforcement authority unfairly to extract, or to attempt to extract, additional civil or administrative monetary payments.” Although DAG Rosenstein explained that this element was simply a restatement of existing law, the DOJ clearly felt it was necessary to reiterate this statement as a matter of explicit policy.
• Second, it states that DOJ components “should” coordinate amongst themselves, where multiple DOJ components are investigating the same misconduct, in order to achieve an “equitable” result.  
• Third, DOJ should, “as appropriate”, coordinate with other federal, state, local, or foreign enforcement authorities seeking to resolve a case with a company for the same misconduct.
• Fourth, the policy requires DOJ attorneys to consider “all relevant factors” in determining whether multiple penalties serve the interests of justice in a particular case and provides a non-exhaustive list of the relevant factors, which include: the egregiousness of a company’s wrongdoing; statutory mandates regarding penalties; the risk of unwarranted delay in reaching a final resolution; and the adequacy and timeliness of a company’s disclosures to and cooperation with the DOJ. 

By offering greater certainty of a “full and final settlement”, the anti-“piling-on” policy aims to further incentivize corporate self-reporting and cooperation by easing companies’ concerns about opening themselves up to investigations and potentially “repeated punishment” by multiple authorities and/or in multiple jurisdictions. The policy does not offer concrete assurance, however, against duplicative penalties; the list of non-exhaustive factors above leaves substantial discretion with the DOJ as to whether multiple penalties may be imposed. DAG Rosenstein noted in announcing the policy that various “practical concerns” – such as the “timing of other agency actions, limits on information sharing across borders, and diplomatic relations between countries” – also limit the DOJ’s ability to reach coordinated outcomes in joint and parallel proceedings. ^[2] In addition, the Policy on Coordination of Corporate Resolution Penalties states that a company’s disclosures to and cooperation with the DOJ will be considered separately “from any such disclosures and cooperation with other relevant enforcement authorities.”^[3] DAG Rosenstein cautioned that what some might call prosecutor shopping – where a company enters into a resolution with an overseas authority and then approaches DOJ for a more lenient US resolution – will not be viewed favorably by the DOJ.

Working Group on Corporate Enforcement and Accountability

The DAG’s remarks on May 9 announced that a new Working Group on Corporate Enforcement and Accountability within DOJ (the “Working Group”) has been set up to promote consistency in white-collar enforcement. The Working Group will consist of leaders and senior officials from the FBI, the Criminal Division, the Civil Division, other litigation divisions involved in significant corporate investigations, and the US Attorney’s Offices. The function of the Working Group is to “make internal recommendations about white-collar crime, corporate compliance, and related issues”,^[4] all, presumably, intended to further the goals set out in the Policy on Coordination of Corporate Resolution Penalties.

A New Outbreak of Sportsmanship?

Although the extent to which the DOJ’s policy to encourage more “equitable result[s]”^[5] in the resolution of parallel and joint enforcement efforts will result in concrete differences in practice remains to be seen, the DOJ’s recognition that duplicative penalties imposed through multi-agency and multijurisdictional enforcement actions can create unfairness, and its policy efforts in recent years to provide greater transparency, predictability, and dare we say, fairness in its approach to corporate enforcement, should, on the whole, be viewed as welcome developments.

We will continue to keep you informed of corporate compliance developments as they occur. Further commentary is available on the Steptoe International Compliance Blog. You can also follow us on Twitter (@SteptoeIntlReg). 

[1] See Rod J. Rosenstein, Remarks at the American Conference Institute's 20^th Anniversary New York Conference on the Foreign Corrupt Practices Act (May 9, 2018), https://www.justice.gov/opa/speech/deputy-attorney-general-rod-j-rosenstein-delivers-remarks-american-conference-institutes (“For many decades, former Deputy Attorneys General have lived on through corporate fraud memoranda bearing their names. We followed the Holder Memo, the Thompson Memo, the Filip Memo and the Yates Memo, to name a few. One of my goals in taking this job was to make sure there would be no Rosenstein memo!”).

[2] See Rosenstein, Remarks at the American Conference Institute's 20th Anniversary New York Conference on the FCPA.

[3] Memorandum from Rod J. Rosenstein, Deputy Att’y Gen. US Dep’t of Just., to Heads of Dep’t Components US Att’ys, Policy on Coordination of Corporate Resolution (May 9, 2018), https://www.justice.gov/opa/speech/file/1061186/download.

[4] See Rosenstein, Remarks at the American Conference Institute's 20th Anniversary New York Conference on the FCPA.

[5] See Rod J. Rosenstein, Remarks to the New York City Bar White Collar Crime Institute (May 9, 2018), https://www.justice.gov/opa/speech/deputy-attorney-general-rod-rosenstein-delivers-remarks-new-york-city-bar-white-collar.