Through her Sept. 9, 2015, Memorandum entitled “Individual Accountability for Corporate Wrongdoing,” the Deputy Attorney General of the United States, Sally Quillian Yates, issued clear marching orders to civil and criminal prosecutors that will surely shape current and future Wall Street prosecutions. The stated purpose of the memo, to improve “effective enforcement of the civil and criminal laws that protect [our nation’s] financial system…”(Sept. 9, 2015, Memorandum from Sally Quillian Yates, Page 1) makes it clear that this policy directive will dramatically impact the resolution of virtually all civil or criminal investigations for corporations and individuals in the financial services industry. The theme of the Deputy Attorney General’s message is equally clear: any corporation hoping to resolve a civil or criminal matter with the Department of Justice (DOJ) must be prepared to serve up individuals who have participated in wrongful conduct.
Although it is debatable whether this is in fact a shift in policy (as the Memorandum claims), what is clear is that this is the first time DOJ has articulated this policy in a written document. Therefore, anyone trying to resolve issues arising out of a civil or criminal investigation must be mindful of the marching orders to prosecutors contained in the Memorandum.
Yates cites “six key steps to strengthen [the government’s] pursuit of individual corporate wrongdoing”:
(1) in order to qualify for any cooperation credit, corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct;
(2) criminal and civil corporate investigations should focus on individuals from the inception of the investigation;
(3) criminal and civil attorneys handling corporate investigations should be in routine communication with one another;
(4) absent extraordinary circumstances or approved departmental policy, the Department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation;
(5) Department attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases; and
(6) civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.
While the tension between resolving matters for a company and the potential consequences to individual employees is hardly new, this recent directive must be at the forefront of any strategy developed on behalf of a corporation to resolve these types of matters. Moreover, given the Deputy Attorney General’s clear message, individual employees may need to seek the assistance of separate counsel more than in the past.