The U.S. Attorney’s Office for the Southern District of New York has launched a new Corporate Enforcement and Voluntary Self-Disclosure Program focused on fraud and financial misconduct that impacts market integrity. The initiative, announced by U.S. Attorney Jay Clayton, aims to encourage companies to report wrongdoing promptly, cooperate with law enforcement, and take corrective actions.
The program sets out specific guidelines for companies that voluntarily disclose certain types of criminal activity. Eligible businesses that self-report qualifying illegal conduct, fully cooperate with authorities, agree to ongoing reporting of criminal behavior for three years, and remediate any harm caused will be given a clear path toward a declination. This process includes receiving a conditional declination letter soon after making a qualifying disclosure. Once the company fulfills all cooperation and remediation requirements and compensates victims for their losses, it will receive a final declination letter concluding the matter without criminal charges.
Jay Clayton stated: “The self-reporting program rests on a simple principle: prompt corporate disclosure and cooperation in rooting out and remedying wrongdoing is in the best interest of victims, shareholders, employees, and our markets generally,” adding: “When companies do the right thing—report quickly, cooperate fully, and remediate harm—they should know where they stand. With this program, we expect there will be strong alignment among corporate fiduciary duties, corporate cooperation with the Department of Justice, and the interests of victims, shareholders, and the public generally. To be sure, companies that choose not to cooperate proactively and are found to have engaged in criminal conduct, will face significant corporate consequences.”
This new approach builds on prior practices by SDNY favoring voluntary disclosures in charging decisions. According to the office’s announcement, it has already provided a conditional declination letter within one month to at least one company following its disclosure under this framework. These disclosures also help prosecutors focus on individual accountability; during Clayton’s tenure as U.S. Attorney, charges have been brought against executives based on information from such reports.
Additional information about eligibility criteria for the program as well as sample documentation can be found at https://www.justice.gov/usao-sdny/self-reporting-program.
