When Companies Do Wrong, DOJ Will Hold Individuals Responsible
When corporations break the law, individuals will be held accountable. That's the gist of a DOJ memo released this month affirming the Department's commitment to pursuing individuals for corporate wrongdoing. (It's almost like they saw the VW emissions fraud coming, or finally learned from years of criticism over their handling of Wall Street rule breaking.)
The so-called Yates memo, named after its author, Deputy Attorney General Sally Quillian Yates, marks a notable change from past practice. It sets out "six key steps" to strengthen the Department's focus on individuals when investigating corporate wrongs. Here are the highlights:
1. Cooperation Doesn't Count Without Individual Disclosure
Companies won't be able to shelter individuals if they want cooperation credit. In order to receive any cooperation credit, a company must reveal "all relevant facts relating to the individuals responsible for the misconduct."
That's a threshold requirement. Without it, companies can't benefit from cooperation, no matter how timely, proactive, and thorough their internal investigations are.
2. Investigations to Focus on Individuals From the Start
Both civil and criminal corporate investigations are to have individuals as their focus from the get go. According to the memo, an individual focus in all investigations is a triple threat: it lets the DOJ "ferret out" the most misconduct, increases cooperation as individuals turn on each other, and results in greater individual convictions.
3. Criminal and Civil Investigators Should Cooperate
So much for turf wars. Under Yates' instructions, criminal and civil investigators should routinely communicate in order to aid each others' investigations. Further, should a prosecutor decide not to pursue criminal charges against an individual, they will still confer with civil counterparts to see what civil suits would be applicable.
4. Corporate Resolution Doesn't Mean Individual Resolution
Should the DOJ reach a resolution with the company, that does not mean that responsible individuals will not be pursued. "Absent extraordinary circumstances," resolving a corporate case will not lead to dropping individual cases and the DOJ should not agree to dismissing charges or providing immunity for individual officers or employees.
5. Corporate Resolution Shouldn't Come Without a Plan for Individuals
When the DOJ settles a mater with a corporation, it must still have a plan to resolve related individual cases. The prosecution or corporate authorization memorandum must discuss potentially liable individuals, the status of the investigations into them, and how those investigations will be resolved before the statute of limitations runs.
6. Inability to Pay Won't Stop Civil Actions
The Yates memo's last point emphasizes that an individual's ability to pay shouldn't be a barrier to actions against them. The DOJ's civil attorneys should consistently focus on individuals and bring suit based on more than just the possibility of recovering money. After all, accountability and deterrence can still be accomplished without a big payout.
- Justice Department Renews Focus on White-Collar Cases (The Wall Street Journal)
- What GCs Can Learn from FIFA's Bribery and Corruption Scandal (FindLaw's In House)
- DOJ Settles Subprime Mortgage Dispute With Citigroup for $7 Billion (FindLaw's In House)
- JPMorgan and DOJ Reach Final $13 Billion Settlement (FindLaw's In House)