The Foreign Corrupt Practices Act world changed last week, and I am not certain it was for the better. In a speech at New York University School of Law, Deputy Attorney General Sally Yates announced a new Justice Department policy on individual liability in matters of corporate wrongdoing. These remarks coincided with release of an internal Justice Department Memo from Yates (the “Yates Memo”) titled, “Individual Accountability for Corporate Wrongdoing.” While the change did not relate to enforcement solely or even primarily to FCPA, I think it will mean a sea change for compliance practitioners going forward.

Ever since former Attorney General Eric Holder’s remarks about banks being “too big to jail” in the context of prosecuting individuals whose actions helped lead to the financial crisis of 2008; critics have faulted the government’s lack of prosecutions of Wall Street. Even a sitting federal judge, U.S. District Judge Jed Rakoff, has been unrelenting for the Justice Department “not holding individuals accountable for the financial crisis and for settlements that looked like sweetheart deals.” So while this policy revision is focused on areas other than the FCPA, its effect will certainly be felt in investigations and enforcement actions in such cases.

In her speech, Yates said the following: “Effective immediately, we have revised our policy guidance to require that if a company wants any credit for cooperation, any credit at all, it must identify all individuals involved in the wrongdoing, regardless of their position, status or seniority in the company and provide all relevant facts about their misconduct.  It’s all or nothing.  No more picking and choosing what gets disclosed.  No more partial credit for cooperation that doesn’t include information about individuals. “

This statement ties directly into the first point of the Yates Memo, which says, “To be eligible for any cooperation credit, corporations must provide to the Department all relevant facts about the individuals involved in corporate misconduct.” [Emphasis in original]

Yates wants companies to investigate individuals immediately at the start of investigations, and wants companies to give up senior executives involved in illegal conduct. She said, “We’re not going to be accepting a company’s cooperation when they just offer up the vice president in charge of going to jail.” This means that high heads in an organization could very well start to roll.

The world has changed and for everyone in the compliance realm. I would suggest you prepare.