As discussed in our May 15th post, Matthew R. Galeotti, the Head of the Department of Justice’s (“Department”) Criminal Division, issued a memorandum on May 12th that highlights the core tenets of the Department’s enforcement of corporate and white-collar matters under the Trump Administration—focus, fairness, and efficiency. Whereas our first post discussed the focus tenet, this second post in our series delves into the Department’s “fairness” tenet. Under the fairness prong, Galeotti underscores that “justice demands the equal and fair application of criminal laws to individuals and corporations who commit crimes.”
For several years, the Department has expressed an emphasis on individual liability. The Galeotti Memorandum explains that a central component of fairness is to “prosecute individual criminals,” focusing on executives, officers, and employees who are directly responsible for wrongdoing. Galeotti further notes that the majority of American businesses are legitimate, and that enforcement overreach can “punish risk-taking and hinder innovation.”
The Galeotti Memorandum cautions that “not all corporate misconduct warrants federal criminal prosecution.” Instead, civil and administrative remedies are often satisfactory for low-level misconduct. Also, Galeotti instructs prosecutors to ensure their charging decisions take into consideration factors such as whether companies self-report misconduct, cooperate with prosecutors, and engage in remediation.
Transparency is another cornerstone of the fairness directive. The Department is committed to making the terms of corporate resolutions—paths to declination, fine reductions, and relevant factors for resolution—"more easily understandable.” As explained by our colleagues last week, the revised Corporate Enforcement and Voluntary Self-Disclosure Policy contemplates benefits for companies that self-disclose, including potentially shorter oversight terms and early termination of agreements.
In addition, the Department is actively reviewing existing agreements between companies and the Department to determine if early termination is warranted. This determination will be based on factors such as:
- the “duration of the post-resolution period,”
- a “substantial reduction in the company’s risk profile,”
- the company’s remediation efforts, and
- the “maturity of” the company’s compliance program.
For companies that have cooperated with the government and remediated the misconduct at issue, the Galeotti Memorandum states that the terms for corporate resolutions will not exceed three years except in rare circumstances. These resolutions will also be regularly reassessed to ensure they remain appropriate.
We will delve into the final prong of the Galeotti Memorandum—efficiency—in our next post.
