DOJ Guidance on Individual Accountability for Corporate Misconduct: - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A DOJ Guidance on Individual Accountability for Corporate Misconduct: Implications for Companies Understanding Key Provisions, Ensuring Compliance, and Mitigating Legal Risks THURSDAY, NOVEMBER 12, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Thaddeus R. McBride, Partner, Bass Berry & Sims , Washington, D.C. David Searle, Chief Compliance Officer and Associate General Counsel, Bristow Group , Houston Lindsey B. Fetzer, Bass Berry & Sims , Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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DOJ Guidance on Individual Accountability for Corporate Misconduct: Implications for Companies Strafford Publications Webinar November 12,2015 5

Agenda  Introduction  Sentencing Commission Guidelines  Yates Memo  Best Practices  Questions 6

U.S. Sentencing Commission  Independent agency of the Judicial Branch  Promulgates guidelines for appropriate sentences for federal crimes 7

The Guidelines  Aimed at ensuring consistency of sentences in criminal cases  Guidelines are advisory but must be considered  Court must select a sentence from within the Guidelines range or specify reason for departure ( e.g. , atypical features of crime) 8

Culpability Score  Penalty imposed is based on “Culpability Score”  Start with “base” offense level for type of crime  Consider specific offense characteristics (e.g., amount of money involved)  Apply adjustments 9

Culpability Score (cont’d) Adjustments Aggravating Factors Mitigating Factors Involvement in / tolerance of criminal Effective compliance and ethics activity program Prior history Violation of an order Self-reporting, cooperation, and acceptance of responsibility Obstruction of justice 10

Effective Compliance and Ethics Program  Designed to prevent and detect criminal conduct; and  Promote culture of ethical conduct and compliance with the law. 11

The Yates Memorandum  Issued on September 9, 2015 by Deputy US Attorney General Sally Yates  Memo to all US Attorneys  Focus on individual accountability for corporate wrongdoing www.justice.gov/dag/file/769036/download. 12

Yates: Key Message  DOJ will  continue to pursue companies for corporate wrongdoing and  simultaneously pursue charges against individual employees 13

Yates: Why and How  “Because a corporation only acts through individuals, investigating the conduct of individuals is the most efficient and effective way to determine the facts and extent of any corporate misconduct .”  Six Key Principles to strengthen the pursuit of individual corporate wrongdoing 14

Yates Principle No. 1  To be eligible for any cooperation credit in a criminal or civil matter, a corporation must identify all individuals involved in or responsible for the misconduct at issue, regardless of their position, status, or seniority, and provide the DOJ all facts relating to that misconduct. 15

Yates Principle No. 2  Criminal and civil corporate investigations should focus on individuals from the inception of the investigation. 16

Yates Principle No. 3  The DOJ’s criminal and civil attorneys handling corporate investigations should be in routine communication with one another. 17

Yates Principle No. 4  Absent extraordinary circumstances or approved DOJ policy, the DOJ will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation. 18

Yates Principle No. 5  DOJ attorneys should not resolve matters with a corporation without a clear plan to resolve related individuals cases, and should memorialize any declinations as to individuals in such cases. 19

Yates Principle No. 6  Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay (e.g., the seriousness of the conduct, past misconduct, whether it is actionable, the burden of proof, and federal resources and priorities). 20

Yates: General Analysis The DOJ understands that lower-level employees facing individual civil or criminal liability are likely to cooperate against their superiors, thereby facilitating DOJ’s ability to obtain information necessary to prosecute individuals further up the corporate ladder. 21

Assessment  It remains to be seen the extent to which the Yates Memo represents a substantial policy change for DOJ as opposed to a confirmation of existing practices.  It also remains to be seen how meaningfully the memo will impact enforcement efforts going forward. 22

Best Practices for Companies Remember the Sentencing Commission Guidelines: An effective compliance program is designed to prevent and detect violations 23

Effective Program: Characteristics  Standards/procedures to prevent/detect criminal conduct  Standards/procedures are communicated to management, high-level personnel, employees, and agents as appropriate ( e.g. , training)  Management is knowledgeable about program and exercises “reasonable oversight” 24

Characteristics (cont’d)  High level personnel have responsibility and adequate resources , authority, and access to management  Effective mechanisms to respond to identified violations  Consistent enforcement ( e.g. , incentives and disciplinary measures)  Monitoring, auditing, and reporting mechanisms 25

U.S. v. Peterson (2012)  Morgan Stanley executive (Peterson) improperly transferred a financial interest to a Chinese official  Morgan Stanley  Maintained robust anti-bribery policies and accounting controls  Frequently trained employees – including Peterson seven (!) times  Monitored and audited transactions  Voluntarily disclosed and cooperated 26

Peterson (cont’d)  Peterson pled guilty to violating the FCPA  Nine months in prison  $250,000 in disgorgement  Relinquishment of $3.4 million in real estate  Morgan Stanley was not charged 27

Key Takeaway  Developing and maintaining an effective compliance program can significantly reduce penalties in the case of a violation by a rogue employee  In light of Yates, it may be easier to impose blame / culpability on employee only 28

Questions? 29

THANK YOU! David Searle Chief Compliance Officer Bristow Group dsearle@bristow.com Thad McBride Bass Berry & Sims tmcbride@bassberry.com Lindsey Fetzer Bass Berry & Sims lfetzer@bassberry.com 30