On February 24, 2026, the U.S. Attorney’s Office for the Southern District of New York (“SDNY”) announced a new “Corporate Enforcement and Voluntary Self-Disclosure Program for Financial Crimes” (the “Program”). Under the Program, SDNY promises swift “conditional declinations,” to be followed by full declinations at the conclusion of SDNY’s investigation, for companies that promptly disclose certain types of financial crimes, fully cooperate with investigators, remediate the misconduct, and pay restitution to victims.
SDNY’s Program provides rich incentives compared to existing voluntary self-disclosure regimes, including DOJ’s Criminal Division’s Corporate Enforcement Policy (“CEP”), yet also carries significant new risks. As discussed further below, the Program offers a more expansive view of which disclosures are considered “voluntary” as compared to existing programs, and it promises declinations in cases where the CEP would typically not provide them, while excluding certain substantive enforcement areas that would be covered by the CEP. Further, the Program limits a company’s financial exposure to restitution, unlike the CEP which also requires payment of disgorgement/forfeiture. And most notably, the Program promises “conditional declinations” “shortly” after a self-report (indicating that the period could be “within two to three weeks”)—an aggressive timetable that directly responds to concerns about the prolonged process and uncertainty that accompany most government investigations, even when originating from a voluntary self-disclosure.
At the same time, disclosures under the Program carry real risks. As with the CEP and other voluntary self-disclosure policies, SDNY retains discretion to determine if a company ultimately cooperates and remediates to SDNY’s satisfaction such that a conditional declination eventually becomes permanent. Significantly, however, even when a declination is awarded, the Program imposes a three-year reporting period requiring reporting of additional potentially criminal conduct—with no promise of leniency for subsequent reports. Further, the Program offers no protection from investigation or prosecution by other components of DOJ (let alone other federal and state enforcement authorities), and disclosure under the Program (and in particular under the Program’s three-year reporting period) may even render a subsequent disclosure to another DOJ component not “voluntary.” And the Program—including the Model Conditional Declination Letter provided by SDNY—creates collateral risks with auditors or civil litigants given the assumption that the Program and letter cover “illegal activity,” a conclusion that is not necessarily accurate or clear early in an investigation.
For companies considering making a voluntary self-disclosure, the Program is most likely to be appealing in financial crimes cases without clear victims (thereby limiting restitution exposure) and for companies that are not subject to significant regulation or recurring compliance issues (thus limiting incremental risks from the three-year reporting period).
Ultimately, the SDNY Program reinforces that there is a premium to be placed on robust corporate compliance and investigation programs, and in particular on the ability to conduct investigations quickly. It is now as critical as ever to maintain the ability to identify sensitive issues for investigation early so that they can be evaluated at the appropriate level of seniority and conducted with the appropriate scope to facilitate effective decision-making regarding whether to voluntarily self-disclose.
- The Program takes a broad view of what qualifies as a voluntary self-disclosure. Under the Program, a disclosure must be made promptly, prior to receipt of a subpoena or document request, and before the company learns of a government investigation. However, a company’s disclosure will not be deemed not voluntary by “(i) knowledge of a whistleblower submission to the company or to a government agency; (ii) press reporting regarding the illegal activity, provided that there is no public reporting of a government investigation into the illegal activity; or (iii) a prior self-report to another agency.” The exclusion of these three factors is a notable departure from prior DOJ definitions of what constitutes a voluntary self-disclosure.
- The Program promises prompt “conditional declinations,” in as little as two to three weeks, with a final declination to follow once the company completes its cooperation and remediation to SDNY’s satisfaction and pays restitution. This compressed timeframe will surely put pressure both on companies and prosecutors to move quickly to evaluate cases, and it remains to be seen if this timetable is workable in practice. Nonetheless, this approach presents a stark contrast to the typical scenario where companies must wait a long time, often years, for an indication of how a case will resolve. It is still uncertain how often, if at all, these conditional declinations will end up being revoked, and under what circumstances SDNY will exercise its considerable discretion to do so.
- The Program does not apply to cases where “aggravating factors” are present; however, the Program’s definition of “aggravating factors” is narrower in important ways compared to the CEP’s definition. Under the CEP, aggravating factors that may preclude a declination include “the nature and seriousness of the offense, egregiousness or pervasiveness of the misconduct within the company, severity of harm caused by the misconduct, or criminal adjudication or resolution within the last five years based on similar misconduct by the entity engaged in the current misconduct.” By contrast, under SDNY’s Program, “the Office will not treat the seriousness of the offense, the pervasiveness of the misconduct within the company, the severity of harm caused by the misconduct, past criminal adjudications, or the involvement of senior leaders as an aggravating or disqualifying circumstance.” Instead, aggravating factors are defined as “any nexus to terrorism, sanctions evasion, foreign corruption, sex trafficking, human trafficking and smuggling, international drug cartels, slavery, forced labor, or physical violence, including the knowing or reckless financing of these activities or laundering of funds in support of these activities.” These factors align with areas that Main Justice has prioritized, which begs the question as to whether Main Justice is asserting jurisdictional control over these areas by retaining the most favorable path to maximizing available credit in these types of cases. In any event, the Program leaves space to obtain a declination in a serious case that otherwise fits in the Program’s parameters, and which may not have been eligible for a declination under the CEP.
- The Program imposes a three-year reporting obligation for additional potential criminal conduct, without a presumption of lenient treatment for that conduct. Under the Program, SDNY requires companies receiving a declination to report “all credible evidence or allegations of criminal conduct by the company or any of its employees that relates to violations of U.S. laws[,]” for a period of three years. Although self-reports under this provision will not disqualify a company from receiving further declinations from SDNY, SDNY retains discretion to determine the appropriate resolution for such subsequent misconduct, and the policy does not suggest that companies will receive declinations or lenient treatment for such additional self-reported criminal conduct. As discussed below, this requirement may preclude a company from receiving voluntary self-disclosure credit from another DOJ component for conduct to which the reporting obligation applies—the CEP, for example, does not consider as “voluntary” disclosures made as a result of a preexisting obligation to disclose to DOJ.
- The Program limits a reporting company’s financial exposure to restitution. Under the Program, a disclosing company is required to pay restitution to receive a declination. However, SDNY will not seek a criminal fine or forfeiture. This is a notable departure from the CEP, under which declinations require payment of disgorgement/forfeiture in addition to restitution.
How will the Program fit in with other corporate enforcement and voluntary self-disclosure policies? DOJ has long sought to incentivize voluntary self-disclosures by companies. In a prior alert, we discussed that multiple U.S. Attorneys’ Offices issued their own voluntary self-disclosure policies. Under the current administration, DOJ updated the CEP (which we discussed here), and Deputy Attorney General Todd Blanche has committed to issuing, though has not yet issued, a Department-wide corporate enforcement policy. It is not clear how SDNY’s Program will fit within this broader framework. Will the DOJ-wide policy promised by DAG Blanche also offer quick conditional declinations? Will Main Justice revisit its position on aggravating factors? Will Main Justice also impose reporting obligations as a condition of declinations? Or will there continue to be a patchwork of voluntary self-disclosure programs covering different substantive areas and enforcement units, with different standards, incentives, and risks? Only time will tell.
What is the scope of offenses the Program applies to? For now, while the Program’s benefits are attractive and set out in detail, its scope is not yet fully clear. By its terms, the Program applies to fraud committed by companies, or by a company’s employees, officers, or directors; fraud involving securities, commodities, or digital assets; false statements or fraud upon an auditor or federal regulator of financial markets; and willful violations of federal securities and investment laws that undermine the integrity of financial markets or harm market participants. According to SDNY, the term “fraud” “is used expansively to include all manner of intentionally deceptive conduct, including false statements, forgery, embezzlement, misappropriation, insider trading, spoofing, and market manipulation.” Although, as noted above, some categories of conduct appear clearly ineligible for the Program’s benefits (e.g., violations of the Foreign Corrupt Practices Act), companies and prosecutors may have to grapple with whether the Program covers more traditional fraud without a clear nexus to the financial markets and securities regulation (e.g., honest services fraud, mail and wire fraud). Companies considering disclosure should keep a close eye on how expansively SDNY confers the Program’s benefits in practice.
How will the Program impact decisions about where and when to make a disclosure? Another issue to consider is the interaction between the Program and other voluntary self-disclosure programs elsewhere in the Department. Several complications could emerge. For example, does the sequencing of disclosures have an impact on the availability of credit? The CEP, for example, allows for voluntary self-disclosure credit for “good faith” disclosures made first to other components of DOJ. SDNY’s Program appears to align with the CEP, although it is not as explicit on this point. On the other hand, the Program does not preclude voluntary self-disclosure credit if a disclosure is previously made to another agency, whereas the CEP does not permit voluntary self-disclosure credit for disclosures made to agencies other than DOJ.
Another question is what disclosure timing is expected under the Program and how that aligns with expectations under other DOJ voluntary self-disclosure programs. The CEP permits voluntary self-disclosure credit following a whistleblower report to the government if the company self-reports within 120 days of receiving the whistleblower’s internal report, while the Program expressly states that a company remains eligible for voluntary self-disclosure credit even if it has “knowledge of a whistleblower submission to the company or to a government agency,” requiring only that the company’s disclosure be made “promptly.” This raises the question of whether a disclosure to SDNY following a whistleblower report, but outside the 120-day window, would be treated as voluntary by SDNY but not by the Criminal Division, which may make the Program appealing in certain circumstances.
The upshot is that companies need to carefully consider a patchwork of voluntary self-disclosure policies with different standards, the benefits and risks of each, and the specific facts of their case to determine the optimal disclosure path—all on a fast timetable and with little room for error.
Consider a case in which a whistleblower discloses both alleged market manipulation and an FCPA violation to a company and the government. Only the former is eligible for credit under the Program, while the Criminal Division could offer credit for both matters. There may be reasons (such as the differing approach to aggravating factors) that a company may prefer to disclose the market manipulation to SDNY, and the FCPA case to the Criminal Division, but the SDNY Program carries a longer tail in the form of a three-year reporting period, which the Criminal Division has not imposed under the CEP. On the other hand, the CEP requires disgorgement and forfeiture in addition to restitution; the Program requires restitution only. And if making multiple disclosures, the company will have to evaluate whether it is practical to manage separately two DOJ components in an investigation based on a single whistleblower report. Ultimately, DOJ’s overlapping but sometimes inconsistent policies continue to make the voluntary self-disclosure landscape a fraught path to navigate.
How strictly will SDNY apply the Program’s cooperation expectations? The Program places significant cooperation requirements on companies, and companies should keep a close eye on how these requirements are applied. Under the Program, companies making a disclosure cannot obtain a declination unless they satisfy an extensive set of cooperation requirements set out in contractual form in the Model Conditional Declination Letter—which are evaluated at SDNY’s discretion and not subject to judicial review. Some of these requirements are standard fare, such as identifying responsible individuals and knowledgeable witnesses, and providing all relevant documents in the company’s possession, while navigating data privacy laws and blocking statutes. Other requirements may present challenging issues for companies. For example, “sharing the non-privileged factual results of internal investigations, including attribution of facts to specific individuals where feasible,” may raise privilege waiver concerns. And “preserving all records and communications across all platforms, including non-email and ephemeral messaging applications for all relevant records custodians” presents complex technical and practical challenges in even the most ordinary investigations. Companies and counsel should monitor SDNY’s enforcement of these requirements to understand how exacting SDNY will be and if companies might lose the benefits of the Program, for example, due to an inability to preserve all ephemeral messages.
How will the Program’s three-year reporting requirement impact disclosure decisions? Finally, as noted above, under the Program, SDNY requires companies receiving a declination to report “all credible evidence or allegations of criminal conduct by the company or any of its employees that relates to violations of U.S. laws[,]” for a period of three years. As an initial matter, this formulation in a reporting standard does not align with reporting standards previously used in other DOJ programs or resolutions. While companies would have previously grappled with what constitutes “credible evidence” under reporting obligations in deferred prosecution agreements, what constitutes a “credible . . . allegation[]”? Presumably SDNY is signaling through this language that companies should promptly report potential criminal conduct broadly without interposing significant investigation or handwringing before picking up the phone.
More significantly, although self-reports under this provision will not disqualify a company from receiving further declinations from SDNY, SDNY retains discretion to determine the appropriate resolution for such subsequent misconduct, and the Program does not indicate even a presumption of a declination or other lenient treatment. Notably, reporting obligations are not standard in declinations under DOJ’s other voluntary self-disclosure programs, and it remains to be seen whether this provision ultimately deters the voluntary self-disclosures that the Program seeks to generate. Further, companies that are required to make a subsequent disclosure to SDNY under this provision may be barred from receiving voluntary self-disclosure credit from another DOJ component under existing Department policies. For example, a company that receives a declination under the Program and then identifies an FCPA issue would be required to report that issue to SDNY, even though FCPA violations are ineligible for credit under the Program. And because that company had a pre-existing obligation to disclose the FCPA violation, there is a question whether the company would be entitled to voluntary self-disclosure credit under the CEP.
Multinational companies that face recurring compliance issues, especially those in highly regulated industries, may view the three-year reporting obligation itself as creating significant uncertainties and risks related to ongoing government engagement, but that risk may become even more pronounced if the company will be obligated to surface issues to the government in the future with questions about its ability to obtain the most favorable outcomes.
SDNY’s Program promises quick conditional declinations, for certain types of financial misconduct, that are likely to be appealing to corporate executives and boards seeking an indication of a conditional outcome during the typically drawn-out process of government investigations. But voluntary self-disclosure always carries risks, and the prospect of a three-year reporting obligation is a new and significant one. Companies facing disclosure decisions should work closely with experienced counsel to evaluate the risks and benefits of the voluntary self-disclosure policies of each DOJ component that could potentially apply. And companies and counsel should watch carefully how SDNY’s Program operates in practice, to see if the benefits it promises outweigh the risks of prolonged entanglement with the government.
If you have any questions concerning the material discussed in this client alert, please contact the members of our White Collar Defense and Investigations practice.
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