New Financial Crimes Self-Reporting Policy Has Risks and Rewards

Olshan Litigation and White Collar & Government Investigations partner Derrelle Janey published an article in Bloomberg Law entitled “New Financial Crimes Self-Reporting Policy Has Risks and Rewards.” In the article, Derrelle analyzes new corporate enforcement and voluntary self-disclosure and cooperation guidance announced by the U.S. Attorney’s Office for the Southern District of New York and what it could mean for companies weighing whether to self-report potential misconduct. “A company will be shielded from criminal liability if it self-reports misconduct in that it will (i) be immediately eligible for a conditional declination letter … and (ii) receive a ‘final’ declination letter if the company cooperates with the government to remediate the misconduct,” Derrelle writes. “In other words, self-reporting puts the company on a pathway toward guaranteed avoidance of criminal charges.” He notes that the policy’s benefits come with significant cooperation expectations that can place compliance functions in a central role—requiring companies to share non-privileged factual results of internal investigations, produce relevant documents and materials, and facilitate employee participation in government interviews and grand jury proceedings. Derrelle further highlights that self-disclosure is an operational and strategic decision that can carry substantial risks. “There is always the risk that, where the company has reported prior wrongdoing, statutes that impose criminal liability for patterns of misconduct will expose the company to serious federal criminal liability. In that situation, the Government will have already required the company to hand over records from the initial self-disclosure that can help establish predicates for holding the company criminally liable for conduct revealed in the subsequent report,” he explains.