Corporate wrongdoers that confess their crimes, and agree to fix the damage, will be able to avoid criminal charges under a new program launched by the U.S. attorney’s office for the Southern District of New York (SDNY).
On Tuesday, the SDNY announced the creation of a program that aims to encourage voluntary self-reporting of illegal activity that involves fraud and other financial misconduct that impacts market integrity.
Under the program, companies that report certain illegal activity, cooperate with law enforcement and remediate the harm caused by the misconduct will be given a clear path to avoiding charges by the U.S. attorney’s office.
Specifically, the office said it’ll provide qualifying companies with a “conditional declination letter” — indicating a commitment not to pursue criminal charges — after they self-report misconduct. And, once the company has fulfilled its obligations to cooperate with law enforcement and provide restitution to victims, it will receive a final letter, concluding the case without bringing charges.
The new initiative is “designed to protect investors, root out wrongdoing more quickly, and strengthen the integrity of the financial markets by encouraging companies to promptly disclose misconduct and take swift remedial measures,” the SDNY said.
It also expands on the SDNY’s existing practice of considering voluntary disclosure and ongoing cooperation as mitigating factors when filing charges.
The office said the program will also enable it to focus on holding individuals accountable for corporate misconduct, noting that it’ll continue to charge individual executives and employees based on information provided in corporate disclosures.
“The self-reporting program rests on a simple principle: prompt corporate disclosure and cooperation in rooting out and remedying wrongdoing is in the best interest of victims, shareholders, employees, and our markets generally,” said Jay Clayton, U.S. attorney for the SDNY and a former chair of the U.S. Securities and Exchange Commission, in a release.
“When companies do the right thing — report quickly, cooperate fully, and remediate harm — they should know where they stand. With this program, we expect there will be strong alignment among corporate fiduciary duties, corporate cooperation with the Department of Justice, and the interests of victims, shareholders, and the public generally,” he added.