New DOJ Corporate Prosecution Guidelines

On September 9, 2015, United States Deputy Attorney General Sally Yates released a memorandum titled “Individual Accountability for Corporate Wrongdoing,” the latest in a series of corporate prosecution guidelines written by Deputy Attorney Generals dating back to what is commonly – and informally – referred to as the “Holder Memo” in 1999.  The guidelines in the “Yates Memo” are not binding, but rather direct United States Department of Justice (“DOJ”)  attorneys on the appropriate manner in which to conduct corporate fraud investigations, charging decisions and strategic considerations when implementing established DOJ policies. Background of DOJ Memos The Deputy Attorney General memos have evolved, starting with the Holder Memo’s evolution to the Thompson Memo in 2003, which focused on factors a DOJ prosecutor must evaluate when determining whether or not to charge a corporation.  These factors included a corporation’s history of violations, whether the corporation voluntary disclosed its wrongdoing, and the effectiveness of the corporation’s existing compliance plans, among others. Following a storm of controversy surrounding the Thompson Memo, then Deputy Attorney General Paul McNulty issued his memo in 2006.  The polemic response to the Thompson Memo arose from the document’s corporate cooperation credit requirements which obliged companies to produce materials from their internal investigations, deny indemnification of legal fees for employees who were targets of investigation and most importantly, waive the sacrosanct attorney-client privilege. The McNulty Memo policies, in essence, still encouraged the waiver of attorney-client privilege to expedite government investigations and required companies to provide full disclosure of facts related to wrongdoing, but softened the DOJ’s stance on indemnification.  Many outside the DOJ, including former DOJ officials and...

The SEC Justifies its Home Court Advantage

In virtually every sport, playing on one’s “home court” is recognized as a distinct advantage over a visiting team as a result of playing on a familiar field and in front of rabid fans.  The same is true in virtually every system of justice in America: any litigator would welcome the opportunity to try cases before judges with whom they are familiar – and opposing counsel is not – especially if the litigator and the judge are both playing for the same team. According to the Securities and Exchange Commission’s (“SEC”) website, the mission of the SEC is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.  As a support of this mission, the SEC’s Division of Enforcement conducts formal and informal investigations into possible violations of the federal securities laws, and prosecutes the SEC’s civil suits in the federal courts and within its own internal administrative proceedings.  On its face, these actions appear reasonably constituted to effectuate the overall mission of the SEC.  The SEC’s Rules of Practice can be found here. In enforcement actions against regulated entities and other publically traded companies, the SEC has a variety of options, including issuing injunctions, ordering the disgorgement of funds, revoking or suspending registrations, and imposing bars or suspensions from employment.  In enforcement actions against regulated persons, the SEC has the authority to order civil penalties as well as disgorgement.  These enforcement decisions are prescribed by appointed federal district court judges or by administrative law judges employed by the SEC.  While federal court orders may be appealed to the United States Court of Appeals, administrative law...