Companies that self-report misconduct to federal authorities in New York City will receive more lenient treatment than if prosecutors discover the misconduct through whistleblowers or on their own. Damian Williams and Breon Peace, the U.S. Attorneys in Manhattan and Brooklyn announced the policy, that encourages companies to disclose wrongdoing voluntarily to U.S. Attorneys. Both offices are key hubs for federal prosecutions of white-collar crime, reports the Wall Street Journal. The benefits of voluntary disclosure will include reduced criminal financial penalties—or potentially none at all—as well as the possibility that a U.S. Attorney will decline to prosecute. When companies self-report, prosecutors say they can better police corporate conduct and gain evidence to charge individuals who may have been involved. U.S. Attorneys have previously offered of leniency on an informal basis. In some cases, prosecutors could still seek a guilty plea even if a company discloses some misconduct, such as if the wrongdoing is pervasive, involves current executive management, or poses a threat to national security, public health, or the environment.
The policy follows a September memo by U.S. Deputy Attorney General Lisa Monaco that required Justice Department branches that prosecute corporate crime to draft formal policies to motivate self-disclosure. DOJ's criminal division last month released its own similar policy for its cases. One recent case illustrated the punishments that companies can incur when they don’t voluntarily disclose misconduct. A U.S. investing division of Allianz SE pleaded guilty to securities fraud last May and agreed to pay about $6 billion in penalties and restitution to investors. Allianz and its subsidiary fully cooperated with the investigation, said U.S. Attorney Williams when announcing the plea, but he said that wasn’t the same thing as self-reporting. “Cooperation, after a fraud has already been caught by the government, is not a get-out-of-jail-free card,” he said. When the charges were announced, Allianz mentioned that the Justice Department findings relating to the criminal misconduct were limited to a handful of individuals no longer at the company.