In an effort to promote greater self-disclosure, the U.S. Justice Department will not penalise corporations that identify wrongdoing by companies they are purchasing. This was announced by the Deputy Attorney General on Wednesday.
Lisa Monaco stated at an industry compliance conference in Chicago that the DOJ aims to avoid punishing responsible companies that buy corporations with a history of wrongdoing by encouraging disclosure of any misbehaviour discovered during the mergers and acquisitions process with a new safe harbour policy.
In prepared remarks, Monaco noted that doing so can help identify and prosecute those who do not. “Good companies, those that invest in strong compliance programmes, will not be penalised for lawfully acquiring companies when they do their due diligence and discover and self-disclose misconduct,” Monaco said.
Companies will have a year from the deal’s closure to fully remediate, and they must reveal any misconduct they find at the other company within six months of the deal’s closing in order to receive credit, according to Monaco.
The new initiative is the most recent in a line of policy adjustments introduced under President Joe Biden that aim to both encourage business compliance and make wrongdoers more accountable.
The Justice Department introduced a new clawback programme earlier this year with the goal of making CEOs responsible for wrongdoing. Monaco cited the Albemarle Corp. settlement from last week, in which the company was given a clawback credit for deducting the compensation of the wrongdoers.
When questioned about a slowing in enforcement, Monaco responded that the agency has been increasing resources for corporate criminal enforcement.
The most recent information from the DOJ’s Fraud Section shows that large corporate resolutions and the total fines resulting from them have been declining since 2019.
The large instances keep coming, she added.