The U.S. Attorney’s Office for the Southern District of New York has announced a significant shift in corporate criminal enforcement. According to recent reports, U.S. Attorney Jay Clayton declared that companies that fully cooperate with criminal investigations may receive non-prosecution agreements (NPAs), effectively avoiding criminal charges altogether.
This policy change creates both opportunities and pitfalls for corporations and their executives facing federal scrutiny.
Understanding the New SDNY Framework
The Southern District of New York—often called the “Sovereign District” for its independence and aggressive prosecution of white collar crime—has long been the premier venue for corporate criminal enforcement. Wall Street banks, Fortune 500 companies, and international corporations have all faced prosecution there.
Under the new policy, companies that disclose wrongdoing, provide detailed evidence, and assist federal prosecutors will be eligible for NPAs. This represents a significant evolution from the prior approach, where even cooperating companies often faced deferred prosecution agreements (DPAs) that included guilty pleas, monitors, and substantial penalties.
The broader DOJ enforcement landscape has shifted as well, with new emphasis on cooperation incentives, voluntary self-disclosure programs, and focusing resources on the most culpable individuals.
The Trade-Off: Corporate Protection vs. Individual Exposure
Here is the critical point that every executive, manager, and employee must understand: when a company cooperates to obtain an NPA, that cooperation often includes providing evidence against individuals.
The DOJ has repeatedly emphasized that meaningful corporate cooperation requires identifying culpable individuals and providing evidence against them. A company seeking an NPA will likely need to waive attorney-client privilege in certain areas, provide employee interview summaries, and produce documents that implicate specific people.
This creates a fundamental tension. The company’s interests (avoiding prosecution) may directly conflict with individual employees’ interests (avoiding becoming the scapegoat). As I emphasize to clients facing these situations, the company’s lawyers do not represent you—and their advice may not protect you.
Lessons from Recent Enforcement Actions
The SEC has continued aggressive enforcement alongside the DOJ. Recent SEC enforcement actions demonstrate continued focus on insider trading, accounting fraud, and disclosure violations. When the SEC investigates, criminal referrals to the DOJ often follow.
Individual liability remains a priority. Whether through the SDNY’s whistleblower pilot program, which offers non-prosecution agreements to individuals who expose corporate crime, or through traditional cooperation agreements, prosecutors are gathering evidence against individuals at every stage of corporate investigations.
Strategic Considerations for Individuals
If you are an executive or employee at a company facing investigation, several strategic considerations apply:
Timing matters. The earlier you understand your exposure and develop a strategy, the more options remain available. Once the company has provided evidence against you, your negotiating position weakens substantially.
Separate counsel is essential. Joint representation—where one lawyer represents multiple employees or where you rely on company counsel—creates conflicts. You need independent legal advice from an experienced criminal defense attorney who represents only your interests.
Document preservation is critical. Do not destroy, alter, or conceal documents. Obstruction of justice charges are often easier to prove than the underlying offense and can carry substantial prison sentences.
Consider your own cooperation options. In some circumstances, being the first to cooperate can provide substantial benefits. The SDNY whistleblower program and similar initiatives create pathways for individuals to obtain protection. But cooperation is a complex strategic decision that requires careful analysis of your specific situation.
The Bottom Line
The SDNY’s new cooperation policy is good news for corporations willing to cooperate. It may be very bad news for individuals within those corporations who become the targets that cooperation produces.
If your company is under investigation, or if you have received any indication that you may be a subject or target of a federal investigation, contact an experienced federal criminal defense lawyer immediately. At The Chetson Firm, Damon Chetson brings over two dozen jury trials and Board Certification in Federal Criminal Law to every client’s defense.