Earlier this month, the Justice Department issued a memo setting forth a new set of guidelines for white-collar civil and criminal investigations, signaling a new departmental focus on individual employees in the white-collar context. ((U.S. Dep’t of Justice, Individual Accountability for Corporate Wrongdoing (2015) [hereinafter Department Memo], available at http://www.nytimes.com/interactive/2015/09/09/us/politics/document-justice-dept-memo-on-corporate-wrongdoing.html?_r=0.)) Aiming to “ease some barriers” to the investigation and prosecution of individual employees, the new guidelines codify Department priorities and establish practices for mandatory adoption across all U.S. Attorney’s offices. ((Ben Protess and Matt Apuzzo, Justice Dept. Vow to Go After Bankers May Prove a Promise Hard to Keep, N.Y. Times: Dealbook (Sept. 10, 2015), http://www.nytimes.com/2015/09/11/business/dealbook/challenges-remain-for-justice-dept-in-prosecuting-executives.html?_r=2.)) In total, the Justice Department memo identifies six new changes to how the Justice Department will conduct white-collar investigations going forward. ((Department Memo, supra note 1, at 2.))
White-collar civil and criminal investigations following the financial crisis of the late 2000’s proved successful in securing large fines from banks and other institutions, but investigations have rarely materialized in actual indictments of individual bankers and executives. ((Matt Apuzzo and Ben Protess, Justice Department Sets Sights on Wall Street Executives, N.Y. Times: Dealbook (Sept. 9, 2015), http://www.nytimes.com/2015/09/10/us/politics/new-justice-dept-rules-aimed-at-prosecuting-corporate-executives.html .)) This low rate of success has been partly attributable to the inherent challenges of prosecuting individuals in the white-collar context. Prosecutors must satisfy a high legal standard, ((Protess and Apuzzo, supra note 2 (noting that prosecutors “must prove that executives intended to break the law and that their actions ‘materially’ affected the market or investors.”).)) and the diffuse nature of responsibility and decision-making in a large corporation, coupled with the complexity of corporate documents, make the project of satisfying that legal standard all the more difficult. ((Department Memo, supra note 1, at 2 (“…where responsibility can be diffuse and decisions are made at various levels, it can be difficult to determine if someone possessed the knowledge and criminal intent necessary to establish their guilt beyond a reasonable doubt…investigators must reconstruct what happened based on a painstaking review of corporate documents…”).)) However, another factor has been the Department’s own recent lack of emphasis on targeting individuals, as the Department often “turns its eyes toward individuals only after negotiating a corporate settlement.” ((Apuzzo and Protess, supra note 4.))
Under the new policy articulated in the Department’s guidelines, the targeting of individual employees will take on a more pronounced role in white-collar civil and criminal investigations, with the Department “fully leverag[ing] its resources to identify culpable individuals at all levels in corporate cases.” ((Department Memo, supra note 1, at 2.)) Many of the guidelines seem to direct prosecutors to view investigations of companies as intimately and strategically tied to investigations of individual employees. For example, the most forceful of these new guidelines is the requirement that companies under investigation must turn over evidence “relating to the individuals responsible for the misconduct” before receiving any cooperation credit, ((Id. at 3.)) thereby supplying prosecutors with considerable leverage in settlement negotiations. ((Protess and Apuzzo, supra note 2 (“Credit for cooperation can save companies billions of dollars in fines and mean the difference between a civil settlement and a criminal charge.”).)) Additionally, the guidelines also declare a policy that “no corporate resolution will provide protection from criminal or civil liability for any individuals.” ((Department Memo, supra note 1, at 5.))
More broadly, these guidelines emphasize individual employees as a priority for the Department in the white-collar investigation context, urging Department attorneys to “focus on individuals from the inception of the investigation” ((Id. at 4.)) and “not resolve matters with a corporation without a clear plan to resolve related individual cases.” ((Id. at 5.)) As the Justice Department’s first major policy initiative under Attorney General Loretta Lynch, ((Apuzzo and Protess, supra note 4.)) the guidelines indicate an effort to secure both large fines and individual executive indictments. Sally Q. Yates, the Deputy Attorney General and author of the Department’s memo, said earlier this year that large fines alone are “not a substitute for holding individuals within those institutions personally accountable.” ((Id.))
It remains to be seen what effect these new guidelines will have on future investigations. As some have noted, most of the directives contained in the new guidelines are already the recognized practice of prosecutors in the Southern and Eastern Districts of New York, where a considerable amount of large white-collar cases are handled. ((Protess and Apuzzo, supra note 2.)) Further, Deputy Attorney General Yates has cautioned that it will take time for the impact of the new guidelines to be felt. ((Id.)) However, even if these guidelines ultimately prove to be purely symbolic, they nevertheless mark a significant shift in the Department’s approach to white-collar issues.