What Every Corporate Officer Should Know About the Yates Memo

In September of 2015, the Deputy Attorney General for the Department of Justice (DOJ) circulated a memo that detailed a change in how corporate officers would be treated by the federal government. Known as the Yates Memo, this document puts all corporate officers on notice of a new stance taken by the federal government. It also notifies corporate officers to seek competent legal counsel to avoid any conflict with its policies.

The essential message of the memo is that the DOJ will increasingly hold individuals accountable for corporate misdeeds. Gone are the days when a corporation can simply settle with the federal government and pay a large fine for wrongs. Now, corporate officers and directors face the prospect of individual charges for things that go wrong at a corporation.

Enforcement Strategy

Coming up with a new policy is one thing but making it happen is another. To implement its goals, the Yates Memo outlines six steps the federal government will take going forward as it interacts with corporations involved in perceived wrongdoing. Those steps are designed to compel corporations to turn over information, including the employees involved in wrongdoing. If compliant, corporate directors can hope for leniency from the federal government if there is corporate misconduct.

The six steps are meant to increase cooperation but may actually have the opposite effect. First, the DOJ states that for a company to be eligible for any cooperation credit, it must turn over all relevant facts about the individuals involved in corporate misconduct. Next, the memo states that all investigations must focus on individuals from the start. What the memo does not anticipate is for these policies to drive corporations to do more to shield their employees than before.

One of the biggest steps the memo outlines in its effort to curb corporate misconduct is what the DOJ will not do in the future. According to the Yates Memo, even if a corporation settles for wrongdoing and pays its fine or other penalty, the DOJ will no longer take individual liability for corporate officers off the table as part of the settlement. There are other steps the DOJ will take as a result of this memo, but these are the most important.

Examples of Enforcement

It is clear what the DOJ is trying to accomplish with this memo and it is clear in its implementation of that intention. It was recently reported that the CEO of a mining company from West Virginia was sentenced to one year of prison for his role in the mine collapse of 2010. This no-mercy approach is intended to strike fear in the hearts of corporate officers and force compliance with all rules and regulations.

The question that remains is what steps corporations must take going forward. To be a successful corporation and avoid this kind of liability, corporations need the right legal counsel on their side. At Royse Law Firm, we can provide the guidance and counsel you and your company needs to succeed. Contact us today.

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Roger Royse

Roger Royse, the founder of the Royse Law Firm, works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger regularly advises on complex tax structuring, high stakes business negotiations and large international financial transactions. Practicing business and tax law since 1984, Roger’s background includes work with prominent San Francisco Bay area law firms, as well as Milbank, Tweed, Hadley and McCloy in New York City.
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