US Department of Justice Announces New Corporate Enforcement Penalty Policy

by Dechert LLP

Dechert LLP

In a speech at the New York City Bar White Collar Crime Institute on May 9, 2018, Deputy Attorney General Rod Rosenstein announced a new U.S. Department of Justice (DOJ) policy designed to encourage coordination among law enforcement agencies in determining corporate enforcement penalties.1 The policy, which will be integrated into the U.S. Attorneys’ Manual, instructs DOJ attorneys to consider the fines, penalties, and forfeiture applied by other law enforcement agencies (both federal and state) in finalizing their own sanctions. Following the March 2018 announcement of the DOJ’s expanded credit for voluntary disclosure of criminal misconduct,2 the new policy further bolsters the DOJ’s shift away from large-scale corporate penalties in the Trump Administration.

Four Key Principles

Under the new policy, DOJ officials will coordinate both within the Department and with other federal enforcement authorities, state and local agencies, and foreign officials. Deputy Attorney General Rosenstein described the new policy as comprising four principles:

  1. Threats of criminal prosecution should not be used solely to persuade companies to agree to larger settlements in civil cases. Rather, the federal government should use its enforcement authority only for the investigation and prosecution of potential crimes.
  2. When attorneys in multiple DOJ components or offices are investigating the same conduct, they should coordinate with each other to “avoid the imposition of duplicative fines, penalties, and/or forfeiture against the company.” Further, the attorneys should consider all penalties being assessed for specific misconduct and act “with the goal of achieving an equitable result.”
  3. The DOJ should attempt to coordinate with other federal, state, local, and foreign enforcement authorities regarding the amount of penalties being levied for the same conduct.
  4. DOJ officials should consider, among others, the following factors to determine whether levying multiple penalties “allows the interests of justice to be fully vindicated”: the egregiousness of the misconduct; statutory mandates regarding penalties; the risk of delay in achieving a resolution; and the level of cooperation that a company provides to the DOJ, regardless of its cooperation with other enforcement authorities.

These four principles, which will become part of the U.S. Attorneys’ Manual, are likely to have the effect of reducing DOJ penalties against companies, at least with respect to misconduct being investigated by other government enforcement authorities.

A Continuing Trend Toward Reduced Corporate Penalties

Deputy Attorney General Rosenstein’s announcement continues a DOJ shift toward reduced corporate penalties. It also comes on the heels of a recent DOJ policy announcement with potentially significant effects for corporate enforcement. In March 2018, the DOJ declared that it would codify a system of credit for companies that voluntarily disclose criminal misconduct. As he did when announcing the voluntary disclosure policy, Deputy Attorney General Rosenstein described the change in DOJ corporate penalty policy as reflecting a greater emphasis on individual prosecutions. Rosenstein stated in his May 9 speech that the DOJ will continue to assess penalties against companies but would focus most significantly on the question, “Who made the decision to set the company on a course of criminal conduct?”3

In targeting individual wrongdoers, according to Deputy Attorney General Rosenstein, the DOJ is pursuing a more effective strategy for deterring criminal activity. He even appeared to fundamentally question the link between corporate settlements and individual deterrence, stating, “Corporate settlements do not necessarily directly deter individual wrongdoers. They may do so indirectly, by incentivizing companies to develop and enforce internal compliance programs. But at the level of each individual decision-maker, the deterrent effect of a potential corporate penalty is muted and diffused. Our goal in every case should be to make the next violation less likely to occur by punishing individual wrongdoers.”

Greater Coordination Among Law Enforcement Agencies

In addition to a continuing emphasis on individual prosecutions, the new corporate penalty policy marks the U.S. Government’s ongoing effort to encourage coordination among law enforcement agencies. Through the new policy, the DOJ is discouraging “piling on” by various government agencies in corporate enforcement actions, in addition to seeking a reduction in corporate penalties that might result in unfair impacts on employees, customers, and investors.

While the newly announced policy may be the DOJ’s most public attempt at coordination, Deputy Attorney General Rosenstein noted that many enforcement offices already communicate to avoid duplicative penalties. He mentioned that the DOJ already works with financial regulators, international antitrust authorities, and other foreign officials on enforcement efforts. For example, the DOJ already does credit companies for penalties paid to other agencies in enforcing the Foreign Corrupt Practices Act. In describing the aims of the policy and explaining the need for greater coordination, Deputy Attorney General Rosenstein specifically referred to the DOJ’s work with the Securities and Exchange Commission (SEC), Commodities Futures Trading Commission (CFTC), the Office of the Comptroller of the Currency, and the Office of Foreign Assets Control (OFAC).

Increased coordination between law enforcement agencies (both domestic and international) is irreversible. 


1) See U.S. Department of Justice, U.S. Department of Justice, Deputy Attorney General Rod Rosenstein Delivers Remarks to the New York City Bar White Collar Crime Institute (May 9, 2018); Memorandum from Rod J. Rosenstein, Deputy Att’y Gen., Policy on Coordination of Corporate Resolution Penalties (May 9, 2018).

2) See U.S. Department of Justice, Deputy Attorney General Rosenstein Delivers Remarks at the 32nd Annual ABA National Institute on White Collar Crime (March 2, 2018).

3) The recent indictment of Volkswagen AG’s former CEO, after a company settlement last year, is perhaps a harbinger of an increased DOJ docket of individual prosecutions related to corporate misconduct. See U.S. Department of Justice, Former CEO of Volkswagen AG Charged With Conspiracy And Wire Fraud In Diesel Emissions Scandal (May 3, 2018).


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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