The U.S. Department of Justice today issued new guidelines on how and when the department will prosecute fraud cases. The guidelines are significant for their impact on whistleblowers and because they are the first significant policy statement to come from DOJ since Donald Trump became President.
The US Attorneys Manual is the guidebook for federal prosecutors. In bringing or resolving cases against corporations and other private entities, the department will rely on a series of factors known as “Filip Factors.”
Overview of Filip Factors
1. Analysis and Remediation of Underlying Misconduct
2. Senior and Middle Management1
3. Autonomy and Resources
4. Policies and Procedures
5. Risk Assessment
6. Training and Communications
7. Confidential Reporting and Investigation
8. Incentives and Disciplinary Measures
9. Continuous Improvement, Periodic Testing and Review
10. Third Party Management
11. Mergers and Acquisitions (M&A)
While it remains to be seen how the Filip factors will be applied, the new 8 page policy requires prosecutors to consider the company’s remediation efforts. It also requires an examination of a company’s compliance programs.
The guidelines appear to be a departure from the so-called Yates memo in effect during the final months of the Obama administration. That policy required prosecutors to consider prosecuting not only companies for their wrongdoing but also key executives who facilitated the wrongdoing.
In recent years, the U.S. Chamber suggested giving companies a pass if they could demonstrate that they had a robust compliance program. The new Filip Factors memo appears to borrow some concepts from the Chamber’s plan.
While having a robust compliance program is a great idea, we know many serial violators that routinely ignore warnings from their compliance professionals.
How will these companies be treated under the new Attorney General? Only time will tell. We hope that our nations’ prosecutors remain committed to pursuing the rule of law and don’t get caught up in the political fray that grips Washington.
Compliance initiatives, ethics hotlines and internal audits are good ideas. They only work, however, if the corporate culture allows them to operate unfettered.
Impact on Whistleblowers
Footnotes in the memo repeatedly refer to the Foreign Corrupt Practices Act (FCPA). Under that law, companies that pay or offer bribes to foreign officials can be prosecuted. The idea is to level the playing field for honest companies and prevent bad companies that pay bribes from gaining an unfair advantage. Under the SEC’s Whistleblower Program, insiders who report FCPA violations can get large cash awards.
Will the new administration pay as many awards? That depends on how many cases are accepted under the new administration. Although unhappy with some of the provisions in the Filip Factors, we remain guardedly optimistic.
Why? The Trump administration claims it want to drain the swamp and prosecutors have long disliked companies and officials that try to get ahead through bribery. Robust enforcement of the FCPA is actually a pro-business move as most companies try to do the right thing and obey the law.
If you have inside knowledge of companies or individuals bribing, soliciting bribes or offering bribes, you may be eligible for a large cash award. The SEC and Justice Department do a fantastic job of safeguarding the identities of FCPA whistleblowers.
To see if you are eligible for an award, contact attorney Brian Mahany at or by phone at (direct). All inquiries kept strictly confidential. To date our whistleblower clients have received over $100 million in awards.
Need more information on Foreign Corrupt Practices Act cases? Visit our FCPA whistleblower page.