DOJ is modifying its focus on individual accountability in government investigations to substantially culpable individuals.
The new approach should simplify both criminal and civil investigations.
This policy shift may incentivize companies to self-report and cooperate.

At the American Conference Institute’s 35th International Conference on the Foreign Corrupt Practices Act, Deputy Attorney General Rod J. Rosenstein confirmed the Department of Justice (DOJ) policy focus on individual accountability in corporate cases, but announced changes to improve its efficacy in practice. This is likely to have an impact on companies that are evaluating whether to self-disclose illegal conduct and to seek cooperation credit.

The Initial “Yates” Policy

On September 9, 2015, then-Deputy Attorney General Sally Quillian Yates reinforced DOJ’s policy on individual accountability for corporate misconduct in criminal and civil cases. (See our client alert of September 18, 2015.) The memorandum, known as the Yates Memo, was founded on six key principles, the most important of which was that to gain cooperation credit, companies had to divulge all relevant facts surrounding the misconduct, including the identities of “all individuals involved in or responsible for the misconduct at issue . . . .” To ensure strict compliance with the policy, companies seeking cooperation credit were forced to provide DOJ with corporate documents disclosing the identity and involvement of every employee who may have engaged in misconduct, regardless of their relative culpability. As a result, investigations were time-consuming, stretched the limited investigative resources of DOJ, and delayed resolutions.

The New Bifurcated Approach

During his remarks, Deputy Attorney General Rosenstein acknowledged the inefficiencies stemming from DOJ’s prior “all or nothing” stance and announced a new tailored, bifurcated approach. In criminal cases, companies seeking cooperation credit need only identify every individual who was “substantially involved in or responsible for” the criminal conduct. In civil cases, such as False Claims Act cases, companies seeking cooperation credit need only identify individuals who played significant roles in misconduct, particularly all senior officials. DOJ’s new approach aims to obtain information on decision makers rather than all individuals potentially involved in misconduct. The intent is to avoid delays in corporate resolutions that often penalize innocent employees and shareholders rather than the decision makers behind the corrupt conduct.

The two new guideposts signal an important deviation from the original guidance reinforced in 2015. In the criminal context, the revised policy narrows the disclosure of individuals involved: whereas companies were previously required to identify all individuals who were involved in the misconduct, now only individuals with substantial involvement must be disclosed. DOJ wants the focus to be on the individuals who authorized the misconduct, rather than on a less practical approach of identifying every individual who may have played a role in the conduct. Meanwhile, in civil cases, the policy condemns the over-disclosure of individuals as inefficient and pointless in practice and as a drain on DOJ’s limited resources. The policy also grants government attorneys more discretion in settling civil cases on less than a “full credit or no credit” basis.

Regardless of this foundational shift in policy, the Deputy Attorney General reiterated that good-faith attempts to cooperate will continue to be the benchmark for companies seeking cooperation credit. He encouraged companies to discuss with DOJ how the company gathers the relevant facts.

Practical Effect

The foundation of DOJ’s policy remains unchanged: the focus of corporate investigations continues to be individual accountability. However, the scope of corporate investigations and the requisite disclosures to DOJ has been streamlined. By simplifying the corporate investigation process, DOJ seeks to better employ its resources, while facilitating investigations for companies seeking cooperation credit. This new approach may encourage more companies to self-report in criminal cases and to cooperate more readily in civil cases.