The US Justice Department (Department) this week announced a policy against piling on – repeated punishments by multiple enforcement authorities for the same misconduct that may exceed what is necessary to rectify the harm and deter future violations.
The new policy encourages Department components to coordinate with one another and with other enforcement agencies – the Securities & Exchange Commission, the Federal Reserve, and other financial regulators – in imposing multiple penalties on a company for the same misconduct. Key features of the policy are summarized below.
Government’s criminal enforcement authority is to be targeted against a company solely for purposes related to investigation and prosecution of a possible crime. The focus should not be to employ the threat of criminal prosecution solely to persuade a company under investigation to pay a larger settlement in a civil case.
Department attorneys in different components and offices seeking to resolve a corporate case, based on the same misconduct, are to coordinate among themselves, so as to achieve an equitable result. The coordination will extend to crediting and apportionment of financial penalties, forfeitures, and other means of avoiding disproportionate punishment.
The policy encourages Department attorneys to, whenever possible, coordinate with other enforcement agencies and foreign enforcement authorities seeking to resolve a case with a company for the same misconduct. However, the Department has warned it will not look kindly on companies that reach out to it only after making inadequate disclosures to secure lenient penalties with other agencies or foreign governments.
The policy outlines factors that Department attorneys may evaluate in determining whether multiple penalties will serve the interests of justice in a particular case. These factors include the: i) egregiousness of the wrongdoing; ii) statutory mandates regarding penalties; iii) risk of delay in finalizing a resolution; and iv) adequacy and timeliness of a company’s disclosures and cooperation with the Department.
Overall, the goal is criminal enforcement that seeks to achieve an equitable result.
*An expert on ethics & compliance, Olakunle Komolafe holds an LL.M. from Harvard Law School, United States of America and another LL.M. in Energy, Natural Resources and Environmental Law from the University of Calgary, Canada.