Action Not Perfection: DOJ Revisions to Yates Memo Still Prioritize Individual Accountability

In November, the U.S. Department of Justice revised principle 9-28.700 – The Value of Cooperation in its Justice Manual – aka the Yates Memo.

When the Yates Memo originally shook the compliance world in the fall of 2015, it became synonymous with unwavering commitment to individual accountability for wrongdoing. Any revisions therefore would strike discussion over whether individual accountability is still a priority for the DOJ. It is. 

A review of Deputy Attorney General Rod Rosenstein’s announcement of the revisions at the 35th International Conference of the Foreign Corporate Practices Act, should assuage any concern that the Department is straying away from holding wrongdoers accountable. In no uncertain terms, Rosenstein stated: “Under our revised policy, pursuing individuals responsible for wrongdoing will be a top priority in every corporate investigation.”

Rosenstein stated: “Under our revised policy, pursuing individuals responsible for wrongdoing will be a top priority in every corporate investigation.”

Instead of a departure from accountability, the revisions are designed to increase enforcement effectiveness and efficiency surrounding individual accountability. This reevaluates the “all-or-nothing” approach intrinsic to the Yates Memo. Previously, corporations would need to provide all relevant information about every individual involved in a potential wrongdoing. Even Rosenstein remarked, at first “it seemed like a great idea.” However, when it comes to implementation, the realities of “all-or-nothing” result in a lot of “nothing” for companies as well as enforcement agencies.

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Instead of identifying every individual involved, the revised policy primarily focuses on identifying individuals substantially involved. The principle reads:

 “In order for a company to receive any consideration for cooperation under this section, the company must identify all individuals substantially involved in or responsible for the misconduct at issue, regardless of their position, status or seniority, and provide to the Department all relevant facts relating to that misconduct.”

Nuances of good faith are also interwoven into the policy. Discovery efforts necessary to uncover all information about wrongdoing can usurp disproportionate resources and people hours for both corporations and regulators. It also pushes investigations down rabbit holes to return insignificant information about individuals who ultimately may not face prosecution. These are the inefficiencies the revisions aim to ameliorate. Simply put, the DOJ wants all the information a corporation has available and expects reasonably thorough investigations to uncover the necessary relevant information to prosecute key players. This is the key to credit.

“If the company is unable to identify all relevant individuals or provide complete factual information despite its good faith efforts to cooperate fully, the organization may still be eligible for cooperation credit.”

This does not mean, however, that the DOJ will take all information from corporations at face value. There will still be a “trust but verify” approach to good faith:

“Department attorneys should vigorously review any information provided by companies and compare it to the results of their own investigation, in order to best ensure that the information provided is indeed complete and does not seek to minimize, exaggerate, or otherwise misrepresent the behavior or role of any individual or group of individuals.”

Furthermore, these revisions may alleviate the original internal branding concerns coming from the compliance industry about the Yates Memo. When every individual involved in a scheme needed to be identified, internal compliance and legal departments turned into aggressive internal investigators, often including investigating innocent employees who unknowingly happened to be involved in fraudulent schemes. Not surprisingly, this was not a good look for internal departments already struggling with rebranding themselves as teams focused on protecting their people.

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Ultimately, these policy changes do not indicate a shift away from the adamancy of individual accountability in the Yates Memo, but rather aligns the language of the law with the realistic implementation of law enforcement.

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