Betting the Corporation: Compliance or Defiance

Lawrence D. Finder, Ryan D. McConnell & Scott L. Mitchell drafted a paper surveying the sixteen corporate deferred prosecutions and non-prosecution agreements entered into by the Department of Justice in 2008.

Betting the Corporation: Compliance or Defiance? Compliance Programs in the Context of Deferred and Non-Prosecution Agreements – Corporate Pre-Trial Agreement Update – 2008

In 2008, every agreement contained some sort of corporate compliance reform provision – continuing a trend we have seen over the last few years. This trend is the focus of this update. Aside from building on prior observations, this piece attempts to draw empirical observations about the types of compliance programs that come out of corporate pre-trial agreements. The authors recognize there is no one-size fits all template for corporate compliance programs. But by examining compliance programs in the context of DPAs and NPAs, the authors strive to provide a picture of what types of compliance measures are negotiated by the DOJ and corporate targets to resolve internal control and other business deficiencies that resulted in criminal wrongdoing. We hope that this will provide some guidance for attorneys and other professionals who deal with compliance issues.

The authors note that one of the big changes in 2008 was the DOJ’s implementation of a new charging policy. (You can find it at 9-28.000 of the U.S. Attorney’s Manual.) Although the policy is no longer associated with a particular person (like the 2006 McNulty memo, the  2003 Thompson memo and the 1999 Holder memo), the nine factors for charging a corporation are still the same:

  1. the nature and seriousness of the offense;
  2. pervasiveness of wrongdoing;
  3. the company’s history of similar conduct;
  4. the company’s timely and voluntary disclosure;
  5. the existence and effectiveness of a pre-existing compliance program;
  6. the company’s remedial actions;
  7. the collateral consequences (including harm to shareholders) of a conviction;
  8. the adequacy of prosecution of individuals; and
  9. the adequacy of civil or regulatory remedies

There is a new statement in USAM 9-28.200:” In certain instances, it may be appropriate, upon consideration of the factors set forth herein, to resolve a corporate criminal case by means other than indictment. Non-prosecution and deferred prosecution agreements, for example, occupy an important middle ground between declining prosecution and obtaining the conviction of a corporation.”

A second change in 2008 was the issuance of the Morford Memo that addresses the use of corporate monitors, providing guidance on issues that may arise in the selection of a monitor and the monitor’s duties.


Total Number of Agreements: 16
Number of Privilege Waivers: 2   (13%)
Number of Agreements with Compliance Monitors: 6   (38%)
Number of Agreements With Compliance Reforms: 16 (100%)

The link above is to a draft copy of the paper. The final version is scheduled to be published in the South Texas  Law Review in May 2009.

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