The U.S. Department of Justice-Criminal Division recently updated its internal guidance to federal prosecutors for evaluating corporate compliance programs. While the DOJ does not prescribe a rigid formula for evaluating these programs, in the criminal context, prosecutors are directed to evaluate whether a program: (1) is well-designed, (2) is being implemented effectively, earnestly, and in good faith, and (3) works in practice.
The new guidance calls on corporations to design compliance programs for "maximum effectiveness" in preventing wrongdoing by employees, and corporate management must enforce the program to prevent tacit encouragement of misconduct.
Corporate compliance programs should be effectively implemented to avoid being merely "paper programs." After initial implementation, the program should be periodically reviewed, and revised as appropriate. Employees should be adequately informed of the compliance program and convinced of the corporation's commitment to it.
Corporate compliance programs should identify misconduct timely to allow for remediation and self-reporting to be considered "strong and effective."
Whether federal prosecutors are conducting an investigation, prosecuting misconduct by a business organization, or determining an appropriate penalty or criminal fine, great consideration is given to whether the corporation had an adequately designed and effectively implemented program that timely identified misconduct.
Attorneys in Ballard Spahr's White Collar Defense/Internal Investigations Group advise clients on designing and implementing corporate compliance programs. They also conduct internal investigations and represent clients facing actual or threatened government enforcement.
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