DOJ Announces Revised Policies for Awarding Cooperation Credit

Corporate Investigations and White Collar Defense

On November 29, 2018, Deputy Attorney General Rod Rosenstein announced revisions to U.S. Department of Justice (DOJ) policies that expand prosecutors’ discretion in awarding cooperation credit to companies facing criminal or civil investigations. Rosenstein announced that companies facing criminal investigations may now receive cooperation credit for identifying to prosecutors individuals who were “substantially involved” in alleged misconduct. This is a notable departure from the previous policy set forth in a 2015 memorandum issued by then-Deputy Attorney General Sally Yates (the Yates Memo), which required companies seeking cooperation credit to identify every employee involved regardless of relative culpability. Rosenstein announced similar revisions in the civil sphere, which grant prosecutors more discretion in awarding cooperation credit to companies that provide “meaningful assistance” to the government’s investigation.

The DOJ’s revised policy makes clear that any company seeking cooperation credit in criminal cases must identify every individual who was substantially involved in or responsible for the alleged criminal conduct (JM 9-28.700). In Rosenstein’s speech announcing the revised policy, he explained that this new approach is aimed at eliminating the inefficiencies associated with requiring companies to identify every individual who may have been involved in alleged misconduct, including those individuals whose involvement was not substantial and who are not likely to be prosecuted. He explained that requiring companies to locate and report to prosecutors every person who is in any way involved in alleged misconduct can impede resolutions and waste resources, particularly with respect to investigations involving large companies with many employees, and investigations that involve activities throughout the company over a long period of time. Thus, the revised policy is focused on awarding cooperation credit to companies that expeditiously identify the corporate actors who play significant roles in the alleged misconduct, such as those who authorize it.

For companies to be eligible for cooperation credit in a civil investigation, the revised policy requires them to provide meaningful assistance to the government’s investigation (JM 4-3.100). According to the new policy, meaningful assistance may include, for example, a corporation’s voluntary disclosure of misconduct, cooperation that allows prosecutors to identify a problem and secure a resolution without expending investigative resources that otherwise would be required, or assistance that enables prosecutors to pursue misconduct that otherwise would not be redressed (JM 4-3.100(3)). 

As in the criminal sphere, companies facing civil investigations are no longer required to identify all individuals involved in the alleged misconduct to receive cooperation credit. Recognizing the difficulty in enforcing this Yates Memo requirement, the revised policy provides that the company must identify all wrongdoing by senior corporate officials, such as members of senior management or the board of directors, to receive any cooperation credit. And, in order earn maximum cooperation credit, a company must do a “timely self-analysis” and be proactive in voluntarily disclosing wrongdoing and identifying all individuals substantially involved in the alleged misconduct, without making the government compel such disclosures with subpoenas or other demands (JM 4-3.100(3)).

Additionally, it should not go unrecognized that Rosenstein also announced two other important policy changes that return discretion to civil prosecutors to resolve each investigation consistent with the relevant facts and circumstances. In particular, he noted that civil prosecutors are now permitted, with supervisory approval, to negotiate civil releases for individuals who do not warrant additional investigation in corporate civil settlement agreements. He also noted that prosecutors are once again permitted to consider an individual’s ability to pay in deciding whether to pursue a civil judgment.

In sum, with respect to both criminal and civil investigations, the revised policies provide prosecutors with greater discretion to reward companies for their cooperation and to seek efficient resolutions that address harm and deter future violations while remaining committed to punishing individual bad actors.

Why it matters

The DOJ’s revised policies abandon the binary, “all or nothing” approach promulgated in the Yates Memo, providing prosecutors with discretion to award cooperation credit to companies that do not (or cannot) identify every individual involved in alleged misconduct. These revisions are expected to lead to more timely and cost-efficient resolutions.

By way of example, Rosenstein explained that in a civil False Claims Act investigation, a company might make a voluntary disclosure and provide valuable assistance that justifies some credit even if the company is eager to resolve the case without conducting a costly investigation to identify every individual who might face civil liability in theory, but in reality would not be sued personally. Under the revised policies, prosecutors will now be able to reward partial cooperation credit in order to seek a timely and cost-efficient resolution with the company.