Filip Factors and The Yates Memo

Transcription

1 Did You Get the Memo? What the Yates Memo Means for Companies and Their Counsel Filip Factors and The Yates Memo Presented by Shari A. Brandt, Esq. (Richards Kibbe & Orbe LLP) Date 18 February 2017 ABA Section of Litigation: Corporate Counsel Seminar

2 Filip Factors Memo issued by Deputy Attorney General Mark Filip on August 28, 2008 revising the Principles of Federal Prosecution of Business Organizations previously issued by Deputy Attorney General Paul McNulty in December Section of United States Attorneys Manual outlines how corporate organizations should be treated in criminal investigations. Filip memo outlined what measures a corporate entity must undertake to qualify for cooperation credit. 2

3 Filip Factors cont. In considering whether to charge a corporation, prosecutors are required to weigh the following factors: 1. Nature and seriousness of the offense, including risk of harm to the public. 2. Pervasiveness of wrongdoing within the corporation, including complicity in or condoning of the wrongdoing by corporate management. 3. Corporation s history of similar misconduct, including prior criminal, civil, and regulatory enforcement actions against it. 4. Corporation s timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation of its agents. 3

4 Filip Factors cont. 5. Existence and effectiveness of the corporation s preexisting compliance program. 6. Corporation s remedial actions, including any efforts to implement or improve an effective compliance program, to replace responsible management, to discipline or terminate wrongdoers, to pay restitution, and to cooperate with relevant agencies. 7. Collateral consequences. 8. Adequacy of the prosecution of individuals responsible for the corporation s malfeasance. 9. Adequacy of remedies such as civil or regulatory enforcement actions. 4

5 Filip Factors cont. USAM : A corporation s timely and voluntary disclosure of wrongdoing and its cooperation with the government s investigation may be relevant mitigating factors. Prosecutor may consider whether the corporation made a voluntary and timely disclosure, and the corporation s willingness to provide relevant information and evidence and identify relevant actors within and outside the corporation, including senior executives. It may be difficult for a prosecutor to determine which individual took which action on behalf of the corporation, and that s why a corporation s cooperation may be critical in identifying potentially relevant actors and locating relevant evidence expeditiously. 5

6 Filip Factors cont. USAM : Cooperation depends on disclosing the relevant facts. It is not predicated upon waiver of attorney-client privilege or work product protection. Most valuable when it involves disclosures of relevant facts concerning misconduct. Not seeking disclosures of discussions between an individual and his attorneys. As long as a corporation timely discloses relevant facts about the putative misconduct, the corporation may receive due credit regardless of whether it chooses to waive privilege. 6

7 Yates Memo Memo issued by Deputy Attorney General Sally Quillian Yates on September 9, Stated purpose: To amend policies and practices in order to most effectively pursue the individuals responsible for corporate wrongdoings. Applies to criminal and civil corporate matters. Some measures are new and others reflect best practices. Reflects 6 key steps to strengthen the pursuit of individual corporate wrongdoing: 7

8 Yates Memo cont. 1. In order to qualify for ANY cooperation credit, corporations must provide the Department with all relevant facts relating to the individuals responsible for the misconduct. Companies cannot pick and choose what facts to disclose. Companies must identify all individuals involved in or responsible for the misconduct regardless of their position, status or seniority, and provide all facts relating to that misconduct. Once a company meets the threshold requirement of providing all relevant facts with respect to individuals, it will be eligible for cooperation credit, and then the traditional factors will be assessed: timeliness of cooperation, diligence, thoroughness, speed of internal investigation, proactive nature of cooperation, etc. 8

9 Yates Memo cont. 2. Both criminal and civil corporate investigations should focus on individual wrongdoing from the inception of any investigation of corporate misconduct. These conditions on cooperation apply equally in civil and criminal investigations. 3. Criminal and civil prosecutors handling corporate investigations should be in routine communication with one another. If there is a decision not pursue a criminal action against an individual (due to questions of intent or burden of proof), criminal attorneys should confer with civil counterparts so that they can make an assessment under applicable civil statutes. 9

10 Yates Memo cont. 4. Absent extraordinary circumstances, or approved departmental policy, the Department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation. Absent extraordinary circumstances or approved department policy (e.g,. Antitrust Corporate Leniency Policy), Department lawyers should not agree to a corporate resolution that includes an agreement to dismiss charges against, or provide immunity for, individual officers or employees, nor in civil case should they release civil claims related to the liability of individuals. Any such release must be approved in writing by the relevant Assistant Attorney General or United States Attorney. 10

11 Yates Memo cont. 5. Department attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals. If there is a corporate resolution, the prosecution or corporate authorization memorandum should include a discussion of potentially liable individuals, the status of those investigations, and the investigative plan to bring those matters to resolution. 6. Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit based on considerations beyond the individual s ability to pay. 11

12 Yates Remarks November 16, 2015 at American Banking Association and American Bar Association Money Laundering Enforcement Conf. Concept of cooperation is not new. It remains as it was in the Filip factors: provide all non-privileged information about the conduct of individuals. What is new is the consequences. In the past it was a sliding scale of cooperation where a company could receive some credit even if it failed to disclose fully all facts about individuals. Now it is a threshold hurdle. Department does not intend for companies to embark on years-long, multimillion dollar investigations. Investigations should be tailored to the scope of wrongdoing. If there are questions about the scope of what is required, pick up the phone and discuss it with the prosecutor. 12

13 Yates Remarks cont. Presumption will be that the corporation has access to the evidence. If there are instances where you do not, or you are legally prohibited from turning it over, discuss it with the prosecutor. Not requiring waiver of attorney-client privilege. If facts are learned through a privileged interview, the notes and memo would be privileged, but the facts learned are not. Do not use the privilege to shield non-privileged information from investigators. Acknowledges that the focus on culpable individuals may make employees nervous and have a chilling effect on a company s ability to learn what happened. This is nothing new and is already reflected in the Upjohn warning. 13

14 Yates Remarks cont. This does NOT require the company to characterize anyone as culpable. The company must simply provide all facts about all individuals involved. Separates timing of a voluntary disclosure from the issue of cooperation. Under the Filip factors these were combined as one factor. A company can still get a benefit from early, voluntary disclosure, even if the Department determines the company does not qualify for cooperation credit because it failed to provide all relevant facts about individuals responsible for the misconduct. 14

15 Shari A. Brandt New York Office T: F: Shari A. Brandt focuses on complex civil litigation, regulatory proceedings, internal investigations, and white collar criminal defense. She often represents clients in matters that proceed simultaneously in regulatory, white collar defense, and civil litigation forums. Ms. Brandt represents international and domestic clients in the finance, accounting, pharmaceutical, and retail industries, among others. She works on behalf of plaintiffs and defendants in civil litigations at the federal and state level, arbitrations, and mediations. She also represents individuals, institutions, securities professionals, accountants, and corporate officers who are under investigation by the CFTC, SEC, FINRA, United States Attorney, and other governmental and self-regulatory bodies. Representative matters include: Representing brokerage firm in connection with domestic and international regulatory inquiries, and civil litigation into the setting of LIBOR and other benchmark indices; Representing group of bank employees in criminal and regulatory inquiries, and civil litigation concerning RMBS; Representing monoline insurer in litigation and regulatory inquiries concerning auction rate securities and RMBS; Representing brokerage firm in connection with regulatory inquiries concerning credit default swaps and other financial products; Representing private equity firm in the United States in two lengthy arbitrations concerning hedge fund valuation, employment law, and breach of contract issues; Representing software consulting company in employment disputes initiated by United States and United Kingdom employees; Representing senior officer of a brokerage firm in connection with multiple regulatory and criminal investigations into market timing; Representing audit committee of a national retailer in internal investigation into incorrect accounting and internal control failures. Ms. Brandt was selected by New York Super Lawyers - Metro Edition as a 2011 New York Rising Star and Super Lawyer. Ms. Brandt has been recommended by The Legal 500 United States ( ) in the areas of litigation, white-collar criminal defense and regulatory law. Ms. Brandt was described as possessing a "deep knowledge of the subject matter, sound judgment, [and] great instincts and [for being] very client service oriented as well as extremely smart, experienced, hardworking and thorough. Ms. Brandt was also named to Global Investigations Review s Top 100 Women in Litigation list (2015) and selected by Benchmark Litigation as a Top Woman in Litigation ( ) and as a Local Litigation Star ( )

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