On August 1, 2024, the Criminal Division of the Department of Justice (“DOJ”) announced its “Corporate Whistleblower Awards Pilot Program” (the “Pilot Program”). This was expected (as Deputy Attorney General Lucy Monaco had earlier announced that the DOJ would adopt a bounty system modeled after the SEC’s whistleblower program). Still, the new DOJ Pilot Program varies significantly from the SEC’s prior program, and these differences raise fundamental questions: What will most encourage whistleblowers to come forward? What will best motivate defendants to self-report their criminal involvement? How will these new DOJ procedures affect the standard Deferred Prosecution Agreement?
A number of law firms have already reviewed the Pilot Program and outlined its differences from the SEC’s now-established bounty award program. This short summary will not repeat what they have said, but will focus more on the incentive effects of the Pilot Program. In overview, two basic points need to be made: (1) The potential whistleblower has a number of reasons to view the Pilot Program as less favorable than the SEC’s existing program; and (2) In contrast, the defendant has greater incentive to use the DOJ’s new program than the SEC’s program because a defendant who follows the DOJ’s instructions and reports to the DOJ the whistleblower’s allegations becomes presumptively entitled to a prosecutorial declination of any criminal charges based on the conduct disclosed by the defendant. Such a...
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