Spilling Secrets: The Push Toward Voluntary Disclosure

Welcome to the January 2024 edition of our newsletter!  In this issue, we’ll examine the trend toward self-reporting initiatives being promoted by various level of law enforcement.

Exercising Self-Discipline: the Trend Toward Voluntary Disclosure

After the U.S. Justice Department unveiled a voluntary disclosure program last year concerning corporate wrongdoing, the U.S. Attorney for the Southern Distroct of New York announced a new policy concerning self-dsclosure for criminal conduct.   The policy would give credit to the company “if it becomes aware of misconduct by employees or agents before that misconduct is publicly reported or otherwise known to the DOJ, and discloses all relevant facts known to the company about the misconduct to a USAO [U.S. Attorney’s Office] in a timely fashion prior to an imminent threat of disclosure or government investigation,” a statement about the program said in part.  “A company that voluntarily self-discloses as defined in the policy  and fully meets the other rquirements of the policy, by—in the absence of any aggravating factor—fully cooperating and timely and appropriately remediating the criminal conduct (including agreeing to pay all disgorgement, forfeiture, and restitution resulting from the misconduct), will receive significant benefits, including that the USAO will not seek a guilty plea; may choose not to impose any criminal penalty, and in any event will not impose a criminal penalty that is greater than 50% below the low end of the United States Sentencing Guidelines (USSG) fine range; and will not seek the imposition of an independent compliance monitor if the company demonstrates that it has implemented and tested an effective compliance program.”

This structure exists in addition to, and not in palce of, existing whistleblower protections.  Given the increasing trend toward, as the U.S, Attorney put it, “more predictable outcomes,” the old saying that an ounce of prevention beats a pound of cure has rarely been more accurate. Using external sources such as public records to complement and help fuel internal inquiries, your company can more holistically understand a problem, whether with an employee or vendor, before it escalates into asituation where self-disclosure of a bad act may be the best -or only – hand to play with regulators or law enforcement.