Three Requirements from the DOJ’s Newest Safe Harbor Policy?

The Department of Justice (DOJ) safe harbor policy was released on October 4, 2023, by Deputy Attorney General Lisa O. Monaco.  The Safe Harbor applies during and after the process of mergers and acquisitions.  It states that if an acquiring company voluntarily discloses misconduct carried out by the company being acquired, either before or after the merger, there will not be criminal prosecution for said misconduct.

To qualify for the Safe Harbor, companies need to meet these 3 requirements, according to this article by Shearman & Sterling LLP:

1. Disclose any misconduct by the acquired company within six months of acquisition.
2. Cooperate with the investigation that follows the disclosure.
3. Remediate and disgorge within a year.

One of the main reasons for this new policy is to encourage companies with effective compliance programs to confidently acquire companies even if there had been misconduct and/or less effective compliance programs in the past.

The new law supports the current trend of allowing companies to avoid prosecution using self-disclosure policies.  One example is the United States Attorney’s Office Voluntary Self-Disclosure Policy where businesses that voluntarily disclose misconduct do not have to plead guilty to a crime, as long as they report and remediate in a timely manner.