When investigating corporate misconduct, federal prosecutors will now focus on the individual employees at fault, according to a recent U.S. Department of Justice (DOJ) memo. The memo “signals a policy shift in a department that has been criticized for issuing fines to corporations instead of prison sentences to wrongdoers,” Law Week Colorado explained. Doug Wright, partner in Faegre Baker Daniels’ corporate practice, said the change could be a source of tension between employees and company brass when facing federal scrutiny.
“I think this could create additional issues between companies themselves and the individuals because the individuals are more squarely in the target zone,” Wright said, adding that employees may start to seek legal representation outside of the corporate family.
The memo also altered the DOJ’s cooperation credit standard. If a company under investigation is found to have failed to disclose any relevant fact, the DOJ can revoke all credit for cooperation. Wright said the new policy means that “companies may have to turn over all of the rocks” if they expect to earn any leniency for cooperation.
Wright, who represents numerous public companies in their ongoing compliance with applicable legal and regulatory requirements, conducted a “Charlie Rose-style” interview of U.S. Attorney for Colorado John Walsh on Sept. 15 at a dinner of the Colorado Chapter of the National Association of Corporate Directors – where they discussed the Yates Memo and what directors need to know about white collar crime.
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