Rod Rosenstein, deputy attorney general of the United States, delivers a lecture on white-collar crime at the New York City Bar Association on May 9, 2018. (Photo: David Handschuh/NYLJ)

The U.S. Department of Justice will no longer “pile on” enforcement penalties against white-collar offenders in an effort to avoid what Deputy Attorney General Rod Rosenstein called “unfair duplicative penalties” in remarks delivered Wednesday morning.

Rosenstein, whose speech kicked off the New York City Bar Association's annual white-collar crime institute, pitched the policy change as a way of streamlining enforcement across agencies, while addressing fairness concerns he said were coming from within the DOJ itself.

“Our prosecutors and civil enforcement attorneys prize the department's reputation for fairness,” Rosenstein said. “They understand the importance of protecting our brand. They asked for support in coordinating internally and with other agencies to achieve reasonable and proportionate outcomes in major corporate investigations.”

The deputy AG said companies are deprived of the benefits of certainty and finality when faced by a multi-agency “pile-on” investigation. Innocent employees, customers and investors who want to resolve the issue and move on needed to be considered. And the department needed to weigh resources being devoted to “an old scheme” versus “fighting a new one.”

“This is another step towards greater transparency and consistency in corporate enforcement,” Rosenstein said. “To reduce white-collar crime, we need to encourage companies to report suspected wrongdoing to law enforcement and to resolve liability expeditiously.”

Rosenstein noted that, on principle, companies should not have the threat of prosecution hung over their heads solely to persuade them to settle for big amounts in civil cases.

The new department policy, then, will mean greater coordination inside the department to “achieve an overall equitable result” for companies being investigated. This may include the crediting of financial penalties, and other “means of avoiding disproportionate punishment.”

The department will also seek to coordinate with other federal partners, as well as state, local and foreign authorities, when seeking to resolve a case with a company for the same misconduct.

Prosecutors will be directed to weigh a series of factors, including the seriousness of the wrongdoing, statutory penalty mandates, the risk of delay in bringing closure, and how well a company behaved in the process.

Rosenstein pointedly noted that “cooperating with a different agency or a foreign government is not a substitute for cooperating” with the DOJ, and the department “will not look kindly” should companies come to the DOJ only after having failed to play the various actors for a better deal elsewhere.

In the end, Rosenstein said the goal is deterrence, which means keeping the focus on individuals, rather than simply punishing companies as harshly as possible. The hope is that this focus will incentivize companies into cooperating early and often when these kinds of actions arise.

“Corporate settlements do not necessarily directly deter individual wrongdoers,” Rosenstein said. “They may do so indirectly, by incentivizing companies to develop and enforce internal compliance programs. But at the level of each individual decision-maker, the deterrent effect of a potential corporate penalty is muted and diffused. Our goal in every case should be to make the next violation less likely to occur by punishing individual wrongdoers.”

Rosenstein noted that some skeptics may wonder how good a policy that was only internal to the department and not, as he acknowledged, enforceable in court is really going to be. Based on his years of experience, he said the policies do have an impact on the discretion prosecutors take in their cases.

“We don't want to limit the discretion of the Department of Justice. What we want to do is channel and guide it, and make sure that all of our employees are following the same general guidelines,” the deputy AG said.