The Department of Justice has announced yet another pilot program, adding to their “mix of carrots and sticks” designed “to promote responsible corporate citizenship.”¹ The new whistleblower pilot program, which is still under development, will incentivize individuals with monetary rewards to disclose corporate wrongdoing to the DOJ. In so doing, the DOJ has ratcheted up the already intense pressure on companies that suspect or discover potential wrongdoing within their organization: it’s a race to DOJ’s doorstep. Who will win? The company or the whistleblower?

Deputy Attorney General Lisa Monaco and Acting Assistant Attorney General Nicole Argentieri announced the program during the American Bar Association’s 39th National Institute on White Collar Crime. According to their remarks, the new whistleblower policy will be more fully developed over the next ninety days and is scheduled to be formally implemented later this year.² The speakers, however, shared a few key features of the policy. Individual whistleblowers will be eligible for payments only if:

• All victims have been properly compensated;
• The information was truthful and not already known to the government;
• The information was provided voluntarily and not in response to any government inquiry, imminent threat of disclosure, or preexisting reporting obligation;
• The whistleblower was not involved in the criminal activity itself; and
• There is not an existing financial disclosure incentive (e.g., qui tam action or another federal whistleblower program).

Although the new policy will ostensibly apply to all types of reported misconduct over which the DOJ has enforcement jurisdiction, the DOJ is particularly interested in rewarding whistleblower reports concerning criminal activity in the US financial system, Foreign Corrupt Practices Act violations outside of the Securities & Exchange Commission’s jurisdiction, Foreign Extortion Prevention Act violations, and domestic corruption cases. AAG Argentieri also noted that the DOJ expects to establish a monetary threshold for award eligibility in order to focus resources “on the most significant cases.”

DAG Monaco stressed that the original disclosure requirement’s alignment with the DOJ’s Voluntary Self Disclosure policy is “key”—the whistleblower must “be the first in the door” with information the DOJ “didn’t already know.” She acknowledged that the purpose of this “carrot” is “to create a multiplier effect” on existing self-disclosure policies and permit the DOJ “to wield larger sticks” against wrongdoers.

Both speakers further highlighted this policy as a continuation of the Department’s 2023 policy innovations, including the Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) and the Compensation Incentives and Clawbacks Pilot Program, as well as a complement to other federal agencies’ whistleblower programs. The announcement follows a similar whistleblower pilot program launched just a few months ago by the Southern District of New York, discussed in further detail here.

* * *

The policy represents yet another beat on the Department’s self-disclosure drum. In practice, however, the policy may have significant consequences for companies, particularly with respect to mishandling internal whistleblower reports, mismanaging internal investigations, and defaulting to a corporate strategy of nondisclosure.

As noted, the policy increases the pressure on companies to disclose potential wrongdoing before a whistleblower does. Companies facing potential misconduct must consider the need to act swiftly and precisely at the beginning of any investigation. The new program and its promise of payouts will strongly incentivize individuals with information to move with haste, but the individuals eligible for the program are not likely to face burdens or risks that the company would if a disclosure is made. These asymmetric incentives heighten the need for companies to be prepared to respond immediately after an issue is discovered, as well as the need to preserve the confidentiality of any internal investigation. We recommend that companies review their information security and confidentiality protocols around such investigations so that the number of employees exposed to potentially harmful facts is as limited as possible.

In the same vein, companies should evaluate whether their internal systems and controls will sufficiently perform as tripwires, such that management and compliance personnel will be alerted to misconduct as quickly as possible after it occurs. Companies may wish to refresh their internal compliance and reporting systems to identify and respond to any potential misconduct.

Relatedly, the AAG and DAG’s remarks made clear that the Department is honing in on particular compliance areas, including a renewed focus on FCPA violations. Companies with exposure to these enforcement priorities should evaluate their risks and existing compliance programs in relation to those priorities.

Voluntary self-disclosures have skyrocketed since 2021. This pilot program ensures that future growth will be exponential, as will the cost for failing to disclose.

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_{1. Deputy Attorney General Lisa Monaco, US Dep’t of Justice, Keynote Remarks at the American Bar}

_{Association’s 39th National Institute on White Collar Crime (March 7, 2024), available at}

_{https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-monaco-delivers-keynote-}

_{remarks-american-bar-associations.}

_{2. Acting Assistant Attorney General Nicole M. Argentieri, US Dep’t of Justice, Keynote Speech at the}

_{American Bar Association’s 39th National Institute on White Collar Crime (March 8, 2024), available}

_{at https://www.justice.gov/opa/speech/acting-assistant-attorney-general-nicole-m-argentieri-}

_{delivers-keynote-speech-american.}

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