Companies can now receive cooperation credit even if they do not identify all individuals involved in the criminal conduct—which the Yates Memo’s “all relevant facts” language required—as long as they identify those who were “substantially involved in or responsible for” the criminal conduct.
On November 29, 2018, Deputy Attorney General Rod J. Rosenstein announced the Department of Justice’s (DOJ) much-anticipated revisions to the September 2015 Memorandum on “Individual Accountability for Corporate Wrongdoing,” commonly known as the “Yates Memo” and named for Rosenstein’s predecessor, Sally Q. Yates. The Yates Memo emphasized the importance of holding individuals accountable for corporate misconduct, and set forth principles for DOJ prosecutors to follow in determining when corporations would qualify for “cooperation credit” in corporate criminal and civil investigations. The most significant—and controversial—provision in the Yates Memo required that “in order to qualify for any cooperation credit, corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct.” The new policy announced by Rosenstein modifies this “all or nothing” approach to cooperation credit by giving DOJ prosecutors and civil attorneys more flexibility.
In announcing the new policy, Rosenstein reaffirmed the Department’s commitment to prosecuting individual wrongdoers, stating that, “The most effective deterrent to corporate criminal misconduct is identifying and punishing the people who committed the crimes.” However, he stated that the lack of flexibility in the Yates Memo’s approach impeded resolutions and wasted resources, and in some cases was not strictly enforced.
For criminal cases, the new policy requires that any company seeking cooperation credit must identify every individual who was “substantially involved in or responsible for the criminal conduct.” Thus, companies can now receive cooperation credit even if they do not identify all individuals involved in the criminal conduct—which the Yates Memo’s “all relevant facts” language required—as long as they identify those who were “substantially involved in or responsible for” the criminal conduct. Rosenstein was clear that this change was in response to “concerns raised about the inefficiency of requiring companies to identify every employee involved regardless of relative culpability,” which can have the effect of delaying investigations. However, companies must still act in “good faith” in identifying such individuals, or they will not receive credit.
For civil cases, the new policy sets up a two-step process. In order to earn “any” cooperation credit, companies must “identify all wrongdoing by senior officials, including members of senior management or the board of directors.” For companies to earn “maximum credit,” they must meet the threshold requirement of the criminal standard, i.e., they “must identify every individual person who was substantially involved in or responsible for the misconduct.” As with the change to the policy in criminal cases, this change is intended to give Department attorneys more flexibility—they can now offer “partial” cooperation credit as long as the company identifies wrongdoing by senior management.
Rosenstein’s revision of the Yates Memo is good news for companies subject to criminal or civil DOJ investigations. Companies can now conduct more efficient and less costly investigations and still receive cooperation credit. Still, determining which employees were “substantially involved in or responsible for the misconduct” may prove difficult in practice. As with all such policy changes, the ultimate effect will be determined over time, as individual DOJ prosecutors and civil attorneys apply the new policy in actual cases. Companies will need experienced counsel to work with the DOJ attorneys implementing the policy to take advantage of these changes.
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