DOJ floats declinations as incentive under M&A self-disclosure safe harbor
The Department of Justice’s (DOJ) push to incentivize companies to voluntarily self-disclose potential misconduct reached its next stage in the form of a safe harbor policy regarding mergers and acquisitions (M&A).
The policy, announced in a speech delivered Wednesday by Deputy Attorney General Lisa Monaco at an industry event, will apply department-wide and offer the potential for companies to receive the presumption of a declination when coming forward with evidence of misconduct at an acquired entity. It includes specific timelines that must be met regarding disclosure and remediation to qualify.
The goal of the policy, said Monaco, is to make clear the DOJ does not want to discourage companies with effective compliance programs from lawfully acquiring businesses with ineffective compliance programs and a history of misconduct.
“Good companies—those that invest in strong compliance programs—will not be penalized for lawfully acquiring companies when they do their due diligence and discover and self-disclose misconduct,” she said.
The safe harbor only applies to criminal conduct discovered in M&A transactions. It does not apply to misconduct required to be disclosed, already public, or known to the DOJ.
To earn the presumption of a declination, companies must: