Representing a potential sea change in how the Department of Justice approaches corporate investigations and prosecutions, a new policy memo stresses the importance of individual prosecutions.
The memo, authored by Deputy Attorney General Sally Yates, is seemingly a reaction to widespread criticism that, especially in the wake of the Financial Crisis, the Justice Department relied heavily on monetary fines and rarely pursued individual prosecutions. That trend evolved from past policy memos by deputy attorney generals Larry Thompson and Paul McNulty, both appointees of President George W. Bush, outlining the Department’s approach for considering corporate “cooperation credits.”
“One of the most effective ways to combat misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing,” Yates wrote, expressing the first major policy shift under Attorney General Loretta Lynch. Her predecessor, Eric Holder, has been criticized for his lack of individual prosecutions.
Yates acknowledged there are “many substantial challenges unique to pursuing individuals for corporate misdeeds.” In large corporations, “responsibility can be diffuse and decisions are made at various levels,” making it difficult for prosecutors to establish guilt beyond a reasonable doubt, especially for high-level executives who may be insulated from the day-to-day activity where misconduct occurs. That leaves investigators to reconstruct what happened with a “painstaking review of what can be millions of corporate documents, often difficult to obtain due to legal restrictions.”
The memo details a six-pronged approach to forthcoming investigations and prosecutions:
In order to qualify for any cooperation credit, corporations must provide the Department with all relevant facts relating to the individuals responsible for the misconduct.
Criminal and civil corporate investigations should focus on individuals from the inception of the investigation.
Criminal and civil attorneys handling corporate investigations should be in routine communication with one another
Absent extraordinary circumstances or approved departmental policy, no corporate resolution will provide protection from criminal or civil liability for any individual.
Department attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize and declinations as to individuals in such cases must be memorialized.
Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.
“The department makes these changes recognizing the challenges that they may present,” Yates wrote. “But we are making these changes because we believe they will maximize our ability to deter misconduct and to hold those who engage in it accountable.
Yates was expected to further detail the policy changes during a speech Thursday afternoon at New York University’s Program on Corporate Compliance and Enforcement.