According to a recent announcement by Deputy Attorney General (AG) Lisa Monaco, the US Department of Justice (DOJ) has introduced a new safe harbor policy for voluntary self-disclosures related to mergers and acquisitions (M&A). The announcement, which took place on October 4, 2023, was made in a speech delivered during the Society of Corporate Compliance and Ethics event. Monaco indicated that this policy would allow companies to dodge criminal prosecution if they voluntarily self-report misconduct detected at an acquired entity in a time-sensitive manner.
McDermott Will & Emery provides further detail, explaining that corporations must satisfy additional conditions to enjoy the benefits of the new policy. For instance, companies are required to rectify the reported misconduct within a year and adopt a cooperative attitude in the face of any subsequent inquiries.
This move by the DOJ is a strategic measure geared towards encouraging a more transparent compliance culture within the corporate world. It also incentivizes companies to take swift remedial action upon uncovering any wrongdoing within their newly-acquired entities.
The introduction of this safe harbor policy is an interesting turn in the DOJ’s approach to regulating M&A activities, particularly since it softens the potential punitive consequences for misconduct.
However, it is important that companies understand the full implications of this policy and the criteria for its application. Legal professionals within corporations and law firms should remain attentive to additional details and practical embodiments of this policy, which will certainly become clearer as it is put into practice and precedents are set.