By Chris Prentice and Andrew Goudsward
(Reuters) -The U.S. Justice Department will not target companies that disclose wrongdoing they find by businesses they are buying in a bid to encourage more self-disclosure, the Deputy Attorney General said on Wednesday.
The DOJ wants to encourage disclosure of any misconduct found during the mergers and acquisitions process with a new safe harbor policy and avoid penalizing responsible companies that acquire corporations with a history of wrongdoing, Lisa Monaco said at an industry compliance conference in Chicago.
"Good companies, those that invest in strong compliance programs, will not be penalized for lawfully acquiring companies when they do their due diligence and discover and self-disclose misconduct," Monaco said in prepared remarks, noting that doing so can help identify and prosecute those who do not.
To get credit, companies must disclose the misconduct discovered at the other firm within six months of the deal closing, and they will have one year from closing to fully remediate, Monaco said.
The new program is the latest in a series of policy changes announced under President Joe Biden designed to simultaneously promote corporate compliance while holding bad actors more accountable.
Earlier this year, the Justice Department rolled out a new clawback program designed to have executives foot the bill for misconduct. Monaco on Wednesday pointed to last week's settlement with Albemarle Corp in which the firm received a clawback credit for withholding bonuses of employees who engaged in the misdeeds.
Democratic U.S. Senator Elizabeth Warren on Thursday slammed the new policy, saying in a statement that it represents a "betrayal of DOJ's mission."
The agency has been boosting resources for corporate criminal enforcement, Monaco said when asked about a slowdown in enforcement.
The number of large corporate resolutions has been falling since 2019, according to the most recent DOJ Fraud Section data.
"The big cases continue to come," she said.
(Reporting by Chris Prentice and Andrew GoudswardEditing by Bill Berkrot and Nick Zieminski)