On February 22, 2023, the US Department of Justice issued a nationwide policy for all US Attorney’s Offices (USAOs) outlining the circumstances in which a company may receive credit for voluntary self-disclosure (VSD).1 The USAO VSD policy was developed in response to Deputy Attorney General Lisa Monaco’s September 2022 directive that each DOJ component maintain a formal written policy setting forth the component’s expectations for what constitutes a VSD, including the benefits that companies can expect to receive if they satisfy the standards for VSD under the respective policy.2 The policy was developed by the Corporate Criminal Enforcement Policy Working Group, which was spearheaded by the US Attorney for the Eastern District of New York, and applies to all USAOs effective immediately.
Under the USAO VSD policy, a company may qualify for benefits if (1) the company “voluntarily” self-discloses the misconduct (e.g., there is no preexisting obligation to disclose or whistleblower report); (2) the misconduct is disclosed before imminent threat of public disclosure or government investigation and “within a reasonably prompt time after the company becom[es] aware of the misconduct”; and (3) the disclosure includes “all relevant facts concerning the misconduct that are known to the company at the time of the disclosure.” If a company voluntarily self-discloses and agrees to pay disgorgement, forfeiture, and restitution, the USAO will not impose a criminal penalty greater than 50% below the low end of the US Sentencing Guidelines (USSG) fine range, and may choose not to impose any criminal penalties.
In addition, the USAO will not seek a guilty plea if a company voluntarily self-discloses pursuant to the policy, fully cooperates, and timely and appropriately remediates, unless there are aggravating factors present. For example, if the misconduct seriously threatens national security, is pervasive throughout the company, or involves current executive management, then the USAO may still seek a guilty plea. If a guilty plea is required due to an aggravating factor, the company may still benefit under the USAO VSD policy, including at least 50% and up to a 75% reduction off the low end of the USSG fine range. Companies also would not receive a corporate compliance monitor—which is costly and inevitably disruptive to the business—if the company has implemented and tested an effective compliance program at the time of resolution.
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The tools memorialized in the USAO VSD policy—specifically reductions in criminal penalties and willingness to forego a corporate monitor—have always been available. However, this is the first time the USAOs have established that companies could receive a specific percentage of fine reductions and other benefits. By clearly articulating these benefits, the USAO VSD policy could further entice companies to self-disclose.
While the USAO VSD policy standardizes the criteria for obtaining VSD credit across US Attorneys’ Offices, companies should keep in mind that they also may need to satisfy other DOJ components’ VSD standards to receive benefits. If a company is being jointly prosecuted by a USAO and another DOJ component, or the reported misconduct is “covered by VSD policies administered by other DOJ components, the USAO will coordinate with, or, if necessary, obtain approval from, the DOJ component responsible for the VSD policy specific to the reported misconduct when considering a potential resolution.” Other potentially applicable VSD policies include the Antitrust Division’s Leniency Policy and Procedures, the Tax Division’s Corporate Voluntary Self-Disclosure Policy, and the Consumer Protection Branch’s Voluntary Self-Disclosure Policy for Business Organizations. USAOs may opt to apply any provision of these or other VSD policies in addition to, or in place of, the USAO VSD policy. Companies should therefore carefully consider whether other VSD policies may be applicable to the misconduct before self-reporting.
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