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DOJ Announces New Policy on Coordination of Corporate Enforcement to Avoid “Piling On”

Deputy Attorney General Rod Rosenstein announced a new Department of Justice policy on May 9, 2018 that seeks to minimize “piling on” by encouraging cooperation among Department components and other enforcement agencies. The policy instructs DOJ components to coordinate with one another and with other domestic and foreign regulators when imposing penalties on a company. This could be a welcome relief for global companies, which have previously faced sometimes overlapping and duplicative penalties for the same underlying conduct.

This trend of increasing coordination globally and within the federal government means that it is more important than ever for companies facing government scrutiny to have a global defense strategy. As multinational corporations under investigation know, conduct in one region or business unit often has global implications, leading to investigations across multiple countries and legal systems. It is crucial to coordinate fact-finding, devise parallel and harmonious defenses in multiple jurisdictions, and align efforts to resolve the matter. A global defense strategy should take into account differences in local laws, including those relating to data privacy, privilege, and employment arrangements, as well as potential exposure to civil law suits. Such a strategy should seek to align interactions with regulators and, now, sequence resolutions in a way that enables companies facing regulatory scrutiny to benefit from the DOJ’s new policy.

The policy consists of four key features:

  • First, the policy includes a reminder that the DOJ should not use its criminal enforcement authority against a company for “purposes unrelated to the investigation and prosecution of a possible crime” (for example, to aid in resolving a civil matter).
  • Second, the policy directs the different components within the DOJ to coordinate with each other to “avoid the unnecessary imposition of duplicative fines” and “achieve an overall equitable result” based on a corporation’s conduct. Deputy Attorney General Rosenstein noted that such coordination “may include crediting and apportionment” of financial penalties, fines, and forfeitures.
  • Third, the policy encourages the DOJ, where possible, to coordinate with – and consider the amount of fines already paid to – other federal, state, local, and foreign enforcement authorities seeking to resolve a case for the same misconduct.
  • Fourth, the policy sets forth factors that the DOJ may use in evaluating whether coordination and apportionment between enforcement authorities serve the interests of justice in a particular case. The factors include the egregiousness of the wrongdoing, statutory mandates regarding penalties, the risk of delay in finalizing a resolution, and the adequacy and timeliness of a company’s disclosures and cooperation with the DOJ.

Among other things, the policy reflects an increasing effort by the DOJ to coordinate more closely with foreign authorities. Deputy Attorney General Rosenstein noted that the DOJ will be dedicating additional resources to the DOJ’s Office of International Affairs (OIA) to assist with obtaining evidence from abroad. This is also intended to improve the DOJ’s ability to support its foreign counterparts in similar requests. Deputy Attorney General Rosenstein emphasized that the DOJ continues to engage in increased cross-border enforcement and pointed to the return of more than 70 individuals to the United States to face fraud-related charges in 2017.

Although the new policy is good news for companies under investigation, Deputy Attorney General Rosenstein cautioned that the DOJ’s ability to coordinate with other agencies may be limited due to “the timing of other agency actions, limits on information sharing across borders, and diplomatic relations between countries.” We understand the Deputy Attorney General’s concern. Nonetheless, an internal DOJ policy is the first step in addressing the overlapping investigations and penalties that can occur when multiple regulators are in the mix. Other agencies, both in the U.S. and abroad, can help achieve the aims of this policy by taking a similar approach.

Deputy Attorney General Rosenstein also warned future potential defendants that cooperation with other authorities “is not a substitute for cooperating with the Department of Justice,” and that the DOJ “will not look kindly” on companies that come to it “only after making inadequate disclosures to secure lenient penalties with other agencies or foreign governments” – a reminder that any global investigation must take into account each regulator’s expectations and objectives.

The new policy and Deputy Attorney General Rosenstein’s remarks can be found at the below links: