Justice Manual § 9-28.900

In conjunction with regulatory agencies and other executive branch departments,[1] the Department encourages corporations, as part of their compliance programs, to conduct internal investigations and to self-disclose discovered misconduct to the appropriate authorities. For the purposes of this Section, a “voluntary self-disclosure” occurs only when a company discloses misconduct to the Department promptly and voluntarily (i.e., where it has no preexisting obligation to disclose, such as pursuant to regulation, contract, or prior Department or regulatory resolution), and when it does so prior to an imminent threat of disclosure or government investigation. See U.S.S.G. § 8C2.5(g)(1).

A. General Principle: Each Department component that prosecutes corporate crime must maintain a written and publicly available component policy on voluntary self-disclosure. That policy must set forth what constitutes a voluntary self-disclosure, including the component’s expectations with regard to the timing of such disclosure and the need for the disclosure to be accompanied by timely preservation, collection, and production of relevant information, what benefits the corporation can expect to receive if they meet the standards for voluntary self-disclosure under the component’s policy, and what circumstances constitute aggravating factors under the component’s policy. All component voluntary self-disclosure policies shall share three common features:

Absent aggravating factors, the Department will not seek a guilty plea where a corporation is determined to have met the requirements of the applicable voluntary self-disclosure policy, fully cooperated, and timely and appropriately remediated the criminal conduct. Each Department component shall define such aggravating factors in their written policies.

The Department will not require the imposition of an independent compliance monitor for a cooperating company that is determined to have met the requirements of the applicable voluntary self-disclosure policy and, at the time of resolution, demonstrates it has implemented and tested an effective compliance program. Such decisions will continue to be made on a case-by-case basis and at the sole discretion of the Department. See JM 9-28.1700.

The Department will apply a presumption in favor of declining prosecution of a corporation that voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated misconduct uncovered as a result of due diligence conducted shortly before or shortly after a lawful, bona fide acquisition of another corporate entity.

The prosecution team should apply this presumption in favor of declination only after concluding that the acquiror (i) voluntarily self-disclosed the misconduct in a timely manner, which generally means within 180 days of the closing date of the acquisition; (ii) fully remediated the misconduct in a timely manner, which generally means within 1 year of the closing date; and (iii) paid any disgorgement, forfeiture, and/or restitution arising from the misconduct at issue, in accordance with the applicable voluntary self-disclosure policy.

Prior to declining a prosecution, the prosecution team must (i) determine that the acquisition served a bona fide business purpose (i.e., was not engineered to circumvent accountability for misconduct) and that both parties to the transaction were not coconspirators in the misconduct; and (ii) consult with the Antitrust and National Security Divisions to ensure that the potential declination would not interfere or be inconsistent with any civil or administrative process related to the acquisition.

When an acquiror discloses violations of the Sherman Act by the acquired entity, the prosecution team should apply this presumption of declination to the acquiror only when the parties (i) satisfy all relevant requirements of the Antitrust Division’s leniency policy, see JM § 7-3.330, et seq.; (ii) voluntarily disclose the misconduct before the closing date of the acquisition; and (iii) suspend any review periods under the Hart-Scott-Rodino Act.

To be clear, a corporation’s voluntary self-disclosure of misconduct is separate and distinct from its cooperation with an investigation, and they are to be treated as two separate and independent factors in connection with charging and resolution decisions. A company that self-discloses its misconduct can then be determined to be not fully cooperative; conversely, a company that does not self-disclose may later elect to fully cooperate with the government’s investigation.

B. Comment: The Department’s voluntary self-disclosure policies serve three complementary purposes: to help Department investigators and prosecutors identify corporate misconduct that they might not have otherwise discovered; to increase the likelihood of holding individual wrongdoers accountable through criminal prosecution; and to encourage corporations to promptly and thoroughly remediate misconduct that they unearth through internal compliance and audit functions.

With regard to Section 9-28.900(A)(3), prosecutors should apply a presumption in favor of declining prosecution only when the acquiror’s voluntary self-disclosure relates to misconduct that the acquiror learned while conducting due diligence in connection with its acquisition of the acquired entity. If the prosecution team determines that the acquiror or its agents have presented false or misleading information to the Department, including about the extent of their prior knowledge of the acquiree’s misconduct, the acquiror shall not qualify for a presumption of declination under this Section, and the prosecution team should determine whether a separate criminal investigation into the false statements is warranted.

Prosecutors may, in their discretion, apply a presumption of declination even when an acquiror voluntarily self-discloses the misconduct more than 180 days after the closing date, or when an acquiror requires more than 1 year after the closing date to fully remediate the misconduct, provided that prosecutors have a reasonable basis for extending such deadlines based on the specific facts and circumstances of the matter. Conversely, the Department expects that when a company possesses evidence of misconduct that endangers national security or presents an ongoing or imminent harm, the company will disclose that misconduct expeditiously rather than wait until the end of the 180-day post-closing window. As a result, prosecutors should not apply a presumption of declination when a company fails to disclose such misconduct expeditiously, and should consider the seriousness of the harm or potential danger when assessing how expeditious the disclosure should be.

The presumption of declination in Section 9-28.900(A)(3) applies only to the acquiror, not the acquired entity. To the extent that the acquired entity remains a distinct legal entity following the acquisition and faces potential criminal liability for its prior misconduct, prosecutors should credit the acquiring entity’s timely disclosure and consider whether the acquired entity otherwise qualifies for benefits under the component’s voluntary self-disclosure policies.

Although Section 9-28.900(A)(3) contemplates an acquiror and an acquiree, prosecutors may also in their discretion apply the policy to a corporate “merger of equals” or other transactional structure. In deciding whether to apply a presumption of declination in such cases, prosecutors should consider the extent to which the merged or consolidated company differs from the corporate entity where the misconduct occurred, including whether the new entity operates with a significantly more robust compliance function and under new management not associated with the prior misconduct.

For the purposes of Section 9-28.900(A)(3)(c), in situations where the Antitrust Division concludes that the parties have satisfied the requirements of Sections 9-28.900(A)(3)(c)(i) – (iii), the prosecution team may effectuate a “presumption of declination” for potential violations of the Sherman Act by issuing a conditional leniency letter or its functional equivalent, pursuant to the Division’s leniency policy. See JM § 7-3.340(B).

Nothing in this Section should be construed to limit any civil and administrative authorities for reviewing the legality of a corporate transaction, including under antitrust or other competition laws, and no Department action taken pursuant to this Section should be construed as rendering judgment on the legality of the transaction itself. Although prosecutors are required to consult with the Antitrust and National Security Divisions prior to issuing a potential declination under Section 9-28.900(A)(3), prosecutors are also encouraged to provide notice to both divisions shortly after the company makes its initial voluntary self-disclosure pursuant to this Section, to the extent practicable, so that these divisions can advise whether the Department’s review pursuant to this Section would interfere or be inconsistent with any civil or administrative process related to the acquisition.

[updated March 2024]

[1] Some regulatory agencies, like the Securities and Exchange Commission and the Environmental Protection Agency, have their own formal voluntary disclosure programs.