DOJ’s New Corporate Enforcement Policy is Stricter on Voluntary Disclosures

Pillsbury partner Jennifer Kennedy Gellie told Law360 that under Part I of the DOJ’s superseding policy, which Gellie called “the gold standard,” companies have to disclose misconduct that the government doesn't already know about in order for the disclosure to be considered voluntary.

The Southern District's policy was less stringent in that regard, she said; companies could be credited for voluntary disclosures so long as they hadn’t received a grand jury subpoena or document request from a law enforcement or regulatory agency.

“That might not seem like a big deal, but that is a pretty big difference,” Gellie said.

The Southern District’s promise of a provisional declination for voluntary disclosures within two to three weeks is “very appealing” for companies that might have reporting obligations with the U.S. Securities and Exchange Commission and want to give their investors certainty, she said.

That timeline for a provisional declination is an “almost unheard-of speed,” she said, noting that prosecutors typically want to ‘kick the tires’ on the disclosures they’re presented with and develop some of their own evidence before offering declinations.

Gellie said she doesn’t read the superseding policy as necessarily precluding the quick provisional declinations out of the Southern District, unless the district starts to have certain reporting requirements to main Justice that make the Manhattan prosecutors unable to stick to their fast timelines. But if the Southern District can stick to that quick pace and provide certainty to corporations, “it may continue to make Southern District one of the more appealing districts to walk in one of these self-disclosures,” she said.

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