Last Wednesday, the US Attorney’s Office for the Southern District of New York (“SDNY”) announced the launch of a whistleblower pilot program, designed to proactively uncover criminal conduct in the Southern District. As described in the press release, the program is designed to “encourage early and voluntary self-disclosure of criminal conduct by individual participants” involved in certain non-violent offenses.
In his announcement, US Attorney Damien Willaims explained that the goal was to incentivize the report of information “regarding criminal conduct undertaken by or through public or private companies, exchanges, financial institutions, investment advisers, or investment funds involving fraud or corporate control failures or affecting market integrity or criminal conduct involving state or local bribery or fraud relating to federal, state, or local funds.”
In exchange for these disclosures—and for ongoing cooperation with the District against other individuals involved in the criminal conduct—program participants may be offered a non-prosecution agreement, provided that certain other conditions are met. Chief among these conditions is the requirement that the misconduct has “not previously been made public,” and was not already known to the USAO. Other requirements include:
- voluntary disclosure (i.e. not in response to an inquiry or other obligation to report);
- the provision of “substantial assistance” in the investigation and prosecution of “one or more culpable persons”;
- complete and truthful disclosure of all criminal conduct in which the individual has participated;
- that the individual is not an elected or appointed official, a federal investigative or law enforcement official or agent, the CEO or CFO (or equivalent) of a public or private company, or a person who is or is expected to become “of major public interest”; and
- that the individual has not engaged in criminal conduct that involves force or violence, a sex offense involving fraud, force, coercion, or a minor, any offense involving terrorism or national security, and does not have a previous felony or other conviction for conduct involving fraud or dishonesty.
This program offers a substantial benefit—a non-prosecution agreement—in exchange for important information, which one hopes will be sufficient to draw in the tips the District is seeking. The extensive list of requirements, however, may give some pause—for example, there is limited insight on what degree of assistance will be considered “substantial,” or what it means for an individual to be “expected to become” a person of “major public interest.” Along the same lines, excluding individuals like CEOs and CFOs may limit the collection of potential reporters, as those individuals—particularly at smaller companies—may be the most likely people to be in possession of relevant information. Luckily, the program appears to have been designed with at least some aspects of these concerns in mind, as it also holds open the door for individuals not meeting all of the above criteria to also receive a non-prosecution agreement in exchange for cooperation—but only if such an agreement would be “in the public interest and necessary in the particular case.” A series of considerations to make this determination are also included.
The program document provides contact details for individuals, or their counsel, to self-disclose pursuant to the new policy: [email protected].
If you are considering disclosures under the new SDNY Whistleblower Pilot Program, please reach out to Alexandra Douglas at [email protected].