Aisling O’Shea,and Nicolas Bourtin are partners and Anthony Lewis is special counsel at Sullivan & Cromwell LLP. This post is based on a Sullivan & Cromwell memorandum by Ms. O’Shea, Mr. Bourtin, Mr. Lewis, John Liolos, and Alexander Willscher.
Summary
On June 1, 2020, the Criminal Division of the U.S. Department of Justice released updated guidance to its prosecutors on how to evaluate the design, implementation, and effective operation of corporate compliance programs in determining whether, and to what extent, the DOJ considers a corporation’s compliance program to have been effective at the time of the offense and to be effective at the time of a charging decision or resolution. [1] The guidance updates a prior version issued on April 30, 2019. [2] The updated 2020 guidance makes several notable changes to the language of its predecessor, but the core structure and content of the guidance remains the same.
Background
DOJ policy and the U.S. Sentencing Guidelines for years have directed federal prosecutors and sentencing judges to evaluate corporate compliance programs. [3] For example, the Justice Manual’s “Principles of Federal Prosecution of Business Organizations” state that prosecutors, in deciding whether to bring criminal charges against a corporation, should consider “the adequacy and effectiveness of the corporation’s compliance program at the time of the offense, as well as at the time of a charging decision” and the corporation’s remedial efforts “to implement an adequate and effective corporate compliance program or to improve an existing one.” [4] Further, in determining potential criminal fines against corporations under the U.S. Sentencing Guidelines, sentencing judges consider whether the corporation had an effective compliance program at the time of the misconduct as a mitigating factor in calculating a corporation’s culpability score. [5]