One of the axioms of white-collar practice today is that companies, especially public companies, do not litigate against criminal and civil enforcement authorities, except in rare circumstances. The threshold for establishing corporate liability is too low, and the costs and risks of vigorously challenging the government are too high. The typical result of these conditions is a negotiation with the government over the charges included in a settlement, whether admissions will be required and, if so, their nature and scope, and how much the company will have to pay the authorities.
In this article, we discuss two trends that may make the already constrained position of companies even more difficult in terms of increased exposure to liability and reduced opportunities to mitigate the terms of settlement. First, companies face expanded self-reporting obligations, requiring them affirmatively to disclose to the government information about possible corporate misconduct. Such obligations come on top of the disclosures required of public companies by federal securities laws and self-reporting required of broker-dealers under FINRA rules. In effect, companies coming under federal regulation, and that is a large number of companies, may increasingly have to become whistleblowers against themselves.
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