Following the 2008 financial crisis and the impressive lack of culpability for those involved, the U.S. Department of Justice (DOJ) determined that there needed to be greater emphasis on individual accountability in investigating corporate misconduct. On September 9, 2015, in an effort to deter future illegal activity, encourage changes in corporate behavior, and promote confidence in the legal system, the DOJ issued the Yates Memo.
Individual Accountability – and a “Leniency Component”
Authored by Deputy Attorney General Sally Quillian Yates, the memo prioritizes individual accountability for corporate wrongdoing. This is done through changes in how the government conducts its corporate investigations – prioritizing the investigation of individuals, encouraging more communication among government attorneys, and reexamining criteria for leniency when a corporation cooperates with the government. This leniency component of the Yates Memo provides – depending how you look at it – either an incentive or a veiled threat for corporations to cooperate in criminal investigations, particularly those involving senior executives who may otherwise be difficult to reach. It changed Department policy by requiring corporations to provide all relevant facts relating to the individuals responsible for misconduct in order to qualify for any cooperation credit. So, how much does a company have to cooperate? While there is not a bright-line test, the DOJ considers timeliness, diligence, thoroughness and the proactive nature of the company in deciding whether or not the cooperation reaches the threshold to become a mitigating factor. It is not enough to comply with subpoenas and requests for specific documents.
How the Yates Memo Affects Investigations
Criminal investigations are not the only cases implicated by the principles outlined in the Yates Memo. In fact, the DOJ recently clarified its expectation of an equal level of cooperation regarding individual accountability in civil investigations. To meet the cooperation threshold, this means that instead of sending millions of documents to the DOJ in basic compliance with the law, a corporation should direct investigators to specific documents or correspondence which it knows will be of use. In the same vein, corporations should encourage individuals to be forthcoming about their conduct or conduct they have witnessed at every level of the corporation. Finally, a corporation seeking to cooperate should provide this information in a timely fashion. These are not the only ways in which a company may cooperate – other means may be considered at the DOJ’s discretion.
Cooperation Is Generally the Best Option
Although a corporation may be hesitant to offer information that would lead to individual accountability, cooperation may nonetheless be beneficial because it will reduce the amount of time and money spent over the course of the investigation. And ultimately, the sums of any resulting fines or awards will be reduced.
This blog is for informational purposes only and does not constitute a legal opinion or advice.