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Carrot Replaces Stick: Corporate Crime Enforcement In the Trump Administration
Elections have consequences, and the election of President Trump has resulted in a significant shift in law enforcement priorities. Corporate enforcement activity is at lows not seen in decades, despite an overall increase of almost 40% in federal criminal cases. This is a product of a change in priorities, both in terms of types of offenses and types of offender: more focus on prosecuting individuals instead of entities and more emphasis on drug, violence, and immigration offense rather than business crimes. In a couple of areas where there may be increased business crime enforcement activity reflected in some of the aggregate numbers — Foreign Corrupt Practices Act (FCPA) and crypto currency — the actual cases nonetheless reflect the administration's reordered priorities. So, for the time being, there will be almost unprecedented opportunity to achieve favorable resolutions for corporate clients.
The New Policies By the Numbers
In April 2017, then Acting Principal Deputy Assistant Attorney General Trevor N. McFadden announced at the ACI Annual FCPA Conference that the Department of Justice (DOJ) was going to be focusing on violent crime, and in September 2018, former Attorney General Jeff Sessions issued a memo saying that the DOJ has "set clear goals … reducing violent crime, homicides, opioid prescription and drug overdose deaths." These are primarily individual offenses, so by shifting resources to these areas, enforcement activity against corporate entities looks to be reduced.
For those corporate crimes DOJ chose to pursue, it also signaled a more conciliatory approach to resolutions. In March 2018, at the ABA White Collar Crime National Institute Deputy Attorney General Rod J. Rosenstein declared that the DOJ wanted to "avoid imposing penalties that disproportionately punish innocent employees, shareholders, customers and other stakeholders" and promised that the DOJ would try to stop multiple law enforcement agencies from "piling on" corporate fines. Section 1-12.100 of the United States Attorneys' Manual was updated reflecting this approach.
The DOJ was not alone, the Co-Director of Enforcement at the Securities and Exchange Commission (SEC), Steven Peikin, told the Wall Street Journal in 2017 that "it may be the case that we have to be selective and bring a few cases to send a broader message rather than sweep the entire field." The Commodity Futures Trading Commission (CFTC), consistent with the DOJ and SEC, released a statement that encouraged corporations to self-report wrongdoing as a way to avoid penalties. Similarly, in 2017 the DOJ revised the DOJ Manual to expand the FCPA Corporate Enforcement Policy encouraging voluntary-disclosure of FCPA-related misconduct. Under the new policy, a company may presume that the DOJ will decline to enforce when the company voluntarily self-discloses its alleged misconduct, fully cooperates with the DOJ, and institutes appropriate and timely remediation. This is becoming the norm, well beyond the FCPA guidance.
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