Revisions to U.S. Sentencing Guidelines for Compliance Programs

At their April meeting, the U.S. Sentencing Commission voted to adopt changes to Chapter 8 of the Sentencing Guidelines Manual. That chapter defines an effective compliance and ethics program and has been one of the sacred texts of the compliance profession.

Here is my summary of the changes:

Changes to §8B2.1

In defining an Effective Compliance and Ethics Program, they are inserting a new Note 6 that focuses on the steps to take after the detection of criminal conduct.

First, the organization must respond appropriately to the criminal conduct, including restitution to the victims, self-reporting and cooperation with authorities.

Second, the organization must assess its program and modify it to make the program more effective. They seem to encourage the use of an independent monitor to ensure implementation of the changes.

Changes to §8C2.5(f)

In calculating the culpability score for having an effective compliance and ethics program, they have removed the near automatic disqualification if the bad actor was  a high level executive. You can get credit, provided you meet the new criteria:

  • the head of the compliance program must report directly to the governing authority or appropriate subgroup (for example, the audit committee of the board of directors),
  • the compliance program must discover the problem before discovery outside the organization was reasonably likely,
  • the organization must promptly report the problem to the government, and
  • no person with operational responsibility in the compliance program participated in, condoned or was willfully ignorant of the offense.

Changes to §8D1.4

The amendment simplifies §8D1.4 (Recommended Conditions of Probation – Organizations) (Policy Statement) on the recommended conditions of probation for organizations. The new section consolidates the list of conditions that are appropriate conditions for probation.

Status of Changes

The changes have to be submitted to Congress and won’t take effect until November 1, 2010. (Unless Congress votes to reject the changes.)

Publication of Changes

You would think that the Sentencing Commission would publish this change on their website or publish a press release. No information about the amendment, the submitted comments or meeting minutes have yet made their way to the website for the United States Sentencing Commission.

Fortunately Susan Hackett of the Association for Corporate Counsel and Melissa Klein Aguilar of Compliance Week were able to alert us and publish a copy of the changes.


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