On February 22, federal prosecutors unveiled a new policy to incentivize and encourage companies to disclose misconduct by its employees or agents. The new United States Attorney’s Offices’ Voluntary Self-Disclosure Policy, which is effective immediately, details the circumstances under which a company will be considered to have made a voluntary self-disclosure (VSD) of misconduct to a United States Attorney’s Office (USAO).  According to the government, the goal of the policy is to standardize how VSDs are defined and credited by USAOs nationwide, and “to incentivize companies to maintain effective compliance programs capable of identifying misconduct, expeditiously and voluntarily disclose and remediate misconduct, and cooperate fully with the government in corporate criminal investigations.”  

“The new Voluntary Self-Disclosure Policy sets a nationwide standard for how U.S Attorney’s Offices will determine whether a company has made a voluntary self-disclosure, and makes transparent the specific, tangible benefits to a company for making a voluntary self-disclosure, fully cooperating, and remediating the criminal conduct” stated United States Attorney Breon Peace in a press release.  “As a result, no matter where in the country a company operates, it can rely on receiving the same treatment and benefits for voluntarily self-disclosing criminal conduct to a U.S. Attorney’s Office.  We hope and expect that companies, as good corporate citizens, will take advantage of this new policy to report criminal misconduct by employees and agents when they become aware of it, so that individual wrongdoers can be held accountable.  When they do, they will have far better and more predicable outcomes under this policy.”

Under the new VSD policy, a company is considered to have made a VSD “if it becomes aware of misconduct by employees or agents before that misconduct is publicly reported or otherwise known to the Department of Justice, and discloses all relevant facts known to the company about the misconduct to a USAO in a timely fashion prior to an imminent threat of disclosure or government investigation.” 

If a company appropriately complies with the VSD policy, the potential benefits may be significant, such as:  USAO will not seek a guilty plea; USAO may choose not to impose a criminal penalty; if a criminal penalty is imposed, it will not be greater than 50% below the low end of the United States Sentencing Guidelines fine range; and USAO will not impose an independent compliance monitor if the company demonstrates that it has implemented and tested an effective compliance program.

When considering whether the VSD policy is right for your company, you must keep in mind the policy’s three aggravating factors that may warrant a USAO to still seek a guilty plea even if the other requirements of the VSD policy are met:  (1) if the misconduct poses a grave threat to national security, public health, or the environment; (2) if the misconduct is deeply pervasive throughout the company; or (3) if the misconduct involved current executive management of the company.  Companies may still enjoy the other benefits even if the USAO does seek a guilty plea. 

While the new policy gives companies options, it is important to remember that the policy’s language and nuances provide prosecutors flexibility.  Therefore, only time will tell how the new policy will apply in practice. 

If your company becomes aware of misconduct, it is in the company’s interest to move quickly to investigate. The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with white collar crime and government investigations. If you need assistance with such a matter, please contact us today.