In an announcement that may indeed prompt more careful considerations within the business acquisitions sector, the U.S. Department of Justice (DOJ) has shared a new policy concerning voluntary self-disclosures of acquired entities’ criminal misconduct. The statement was made by none other than Deputy Attorney General Lisa Monaco.
The noteworthy aspect of this policy lies in its provision of what’s being referred to as a ‘safe harbor’. This essentially sets forth clear timelines wherein an acquiring company can disclose any criminal conduct committed by an entity they’ve purchased. However, despite setting concrete timelines, legal experts from Hogan Lovells have pointed out that the cost of voluntary self-disclosure could still prove to be highly significant for those in the transactional line of fire.
To provide some historical context, the U.S.
Department of Justice Criminal Division and Antitrust Division have had policies regarding voluntary disclosure of criminal conduct in the past. But Monaco’s recent announcement introduces a new layer to these policies, placing increased weight on corporate self-governance and making space for potential shifts in legal strategies for affected corporations and law firms.
This development comes at an intriguing crossroad for corporations involved in mergers and acquisitions, where legal compliance and risk management are of paramount importance. Law firm professionals and corporate legal teams will need to recalibrate their risk assessment strategies and carefully evaluate whether self-disclosure under this new DOJ policy is a viable step for their respective organizations. That being said, the full impact of this policy remains to be seen, as its practical implications are mapped onto real-world business transactions and legal proceedings in the upcoming months.