DOJ Increasingly Targeting Executives for Compliance Failures, Official Says

DOJ is increasingly prioritizing corporate enforcement against executives -- regardless of how high they rank -- and is more frequently looking to take those cases to trial, said Marshall Miller, principal associate deputy attorney general.

Marshall pointed to the government’s record sanctions penalty earlier this month against virtual currency exchange Binance (see 2311280032 and 2311210076) and the prosecution of its CEO for violating anti-money laundering laws. That case is a “prime example of our determination to hold accountable corporate executives no matter how prominent or influential,” Marshall said Nov. 28 during New York City Bar Association’s International White Collar Crime Symposium, according to the prepared text of his remarks.

He called the effort “resource-intensive,” adding that prosecuting the “most important cases” often involves “breaking down complex criminal schemes” and hurdling “aggressive defenses” from “sophisticated” counsel. “But we will not shy away from the challenge,” he said.

Although DOJ is prioritizing enforcement of high-profile corporate cases, the agency isn’t only “measuring success in the number of prosecutions we bring or the higher sentences we are securing.” It’s also looking to incentivize “good corporate compliance” to prevent violations, he said, specifically pointing to the agency’s recently revamped voluntary self-disclosure (VSD) policies (see 2301190031).

“Early returns demonstrate that the Department’s transparent and predictable VSD policies are yielding the intended results,” Marshall said. “Multiple” companies have voluntarily self-reported potential violations since those policies were announced in January, and investigations have already begun, he said. “So, stay tuned.”

DOJ is also increasingly expecting corporations to incorporate compensation clawback policies in their compliance programs, Marshall said, which can lead to clawbacks of bonuses or other rewards for employees who directly participated in or oversaw the violations. Lawyers have said the agency is now asking companies about their compensation clawback policies in almost every enforcement action (see 2310110072).

Under a new pilot program within the DOJ’s Criminal Division, Marshall said a company hoping to reach a resolution with the agency must develop and implement “compliance-promoting criteria within its compensation and bonus systems.” And companies that “withhold or seek to claw back compensation from corporate wrongdoers” may see their penalties reduced “by the amount of the clawback.”

Companies should review their compensation policies now, “long before a company discovers misconduct,” Marshall said. He also said they “should be regularly deployed,” adding that “a paper policy not acted upon is really no better than having no policy at all.”