It was not that long ago that the Antitrust Division had a very black and white position on compliance programs. They were important to keep a company from violating the Sherman Act. And, if a company was involved in a cartel, the Corporate Leniency Program could be used to reward a company, if through its compliance program, it was the first company to detect and report the violation and cooperate in the investigation. But, after that, regardless of the circumstances: “No credit for you!” The door was opened a crack in a speech given by Brent Snyder, Deputy Assistant Attorney General for Criminal Enforcement in a September 9, 2014 speech “Compliance Is A Culture, Not Just A Policy” when Snyder indicated the Division was open to rewarding a company for a compliance program and was looking for the proper situation.
The Division recently found that opportunity in its May 20, 2015 plea agreement with Barclay’s, a bank fined in the Forex investigation. In the Barclay’s plea agreement (here), the company agreed to pay a fine of $650 million for its illegal conduct in the Forex market. But, the plea agreement also called for a $60 million penalty for the company’s rate rigging activity in Libor. In 2012, Barclay’s entered into a non-prosecution agreement with the Criminal Division in relation to the Libor rate rigging. Barclay’s Forex conduct was ongoing during the time the two-year term Libor non-prosecution agreement prohibited the defendant from committing any other violations. As a result, Barclays’ was dinged for an additional $60 million in the Forex plea agreement. The Barclay’s plea agreement was notable, however, in that for the first time, the Division publicly gave credit to a corporation for implementing and/or improving a compliance program. Paragraph 13 of the Barclay’s plea agreement said only: “The parties further agree that Recommended Sentence is sufficient, but not greater than necessary to comply with the purposes set forth in 18 U.S.C. §§ 3553(a), 3572(a), in considering, among other factors, the substantial improvements to the defendant’s compliance and remediation program to prevent recurrence of the charged offense.”
Yesterday, Brent Snyder made public remarks at a conference in Chicago about “credit for compliance.” As reported in Law 360, Snyder said:
“Credit will require action and results, not just mere promises of future action…. It’s senior executives who lead by example and hold themselves accountable … that bring about culture change. It’s senior executives who create a zero-tolerance compliance environment that bring about culture change. And it’s companies that make responsible decisions about the roles of … culpable employees that do not accept responsibility that bring about culture change. That is what we will be looking for.”
The basis for the compliance credit was quite different from a company seeking credit for an effective compliance program that was violated by a “rogue employee.” Snyder has previously stated that: “The ‘lone rogue cartel offender’ is a little like Big Foot, often talked about, rarely seen.” In fact, arguing that a lone rouge employee committed a cartel offense can work against a company because it may seem like the company is looking for a scapegoat instead of admitting broader employee conduct in the cartel. I will say from my own experience, it is rare that a company can get involved in a cartel offense with a single employee. In cases where it has happened, it is usually a small company and the President is the “rogue employee.” Larger conspiracies generally involve multiple layers of company employees to carry out. In my experience, the best way to argue for a reduced sentence with the Antitrust Division is by providing extraordinary cooperation (which can cost a great deal of time and money) and now, a real commitment to changing the corporate culture through a serious upgrade in an effective corporate ethics and compliance program.
A couple of other notes about the Antitrust Division’s position on credit for corporate compliance. Barclays received this credit in the very same plea agreement where they had to pay an additional $60 million for Forex price fixing while still under an NPA for Libor rate rigging. It is extraordinary that in the same plea agreement where Barclays was penalized for recidivism, Barclays received credit for beefing up its compliance program. The two are not mutually exclusive and it demonstrates the Division is really open to fact based arguments. (Unfortunately, there is no guidance on what specifically Barclays did to earn this credit.) Also, besides the credit for compliance carrot, the Division has recently wielded a very heavy stick—seeking and getting external corporate monitors in situations (AU Optronics and Apple) where the Division felt the company did not take compliance efforts seriously, even after being found to have violated the law.
This is an important change in the Antitrust Division’s policy towards compliance programs. Credit goes to the Division to being open to this change, and also to commentators such as Joe Murphy and defense attorneys who have long argued that the Division should be open to such a change. It remains to be seen how this change plays out in future cases.
Stay tuned. Thanks for reading.