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31 Days to a More Effective Compliance Program: Day 6 - DOJ M&A Safe Harbor
In October 2023, Deputy Attorney General Lisa Monaco announced a new policy regarding M&A. It is a Mergers & Acquisitions Safe Harbor policy that encourages companies to self-disclose criminal misconduct discovered by an acquiring company during the acquisition of a target company. Under the policy, the acquiring party will receive a presumption of criminal declination if it promptly and voluntarily discloses criminal misconduct, cooperates with any ensuing investigation, and engages in appropriate remediation, restitution and disgorgement.
Under this new Mergers & Acquisitions Safe Harbor, which applies across the Department of Justice, companies that promptly and voluntarily disclose criminal misconduct with the Safe Harbor period, and then cooperate with the resulting investigation, engage in timely and appropriate remediation and pay applicable restitution and disgorgement, will receive a presumption of a declination. Once again, the key deadlines are as follows:
The 6 month and one-year deadlines are subject to modification depending on the specific circumstances and complexity of the transaction. The acquired company can also qualify under the Mergers & Acquisition Safe Harbor Policy for voluntary self-disclosure benefits. Interestingly, DOJ clarified that any misconduct disclosed under the Safe Harbor Policy will not implicate or be counted in any future potential recidivist analysis.
Three key takeaways:
1. The DOJ Mergers & Acquisitions Safe Harbor policy encourages companies to self-disclose criminal misconduct discovered by an acquiring company during the acquisition of a target company.
2. The DOJ is seeking to incentivize an acquiring company to timely disclose misconduct uncovered during the M&A process.
3. The DOJ has made clear that under this new Mergers & Acquisition Safe Harbor Policy organizations that do not perform effective due diligence or self-disclose misconduct at an acquired entity will be subject to full successor liability.
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By Thomas Fox
5
11 ratings
In October 2023, Deputy Attorney General Lisa Monaco announced a new policy regarding M&A. It is a Mergers & Acquisitions Safe Harbor policy that encourages companies to self-disclose criminal misconduct discovered by an acquiring company during the acquisition of a target company. Under the policy, the acquiring party will receive a presumption of criminal declination if it promptly and voluntarily discloses criminal misconduct, cooperates with any ensuing investigation, and engages in appropriate remediation, restitution and disgorgement.
Under this new Mergers & Acquisitions Safe Harbor, which applies across the Department of Justice, companies that promptly and voluntarily disclose criminal misconduct with the Safe Harbor period, and then cooperate with the resulting investigation, engage in timely and appropriate remediation and pay applicable restitution and disgorgement, will receive a presumption of a declination. Once again, the key deadlines are as follows:
The 6 month and one-year deadlines are subject to modification depending on the specific circumstances and complexity of the transaction. The acquired company can also qualify under the Mergers & Acquisition Safe Harbor Policy for voluntary self-disclosure benefits. Interestingly, DOJ clarified that any misconduct disclosed under the Safe Harbor Policy will not implicate or be counted in any future potential recidivist analysis.
Three key takeaways:
1. The DOJ Mergers & Acquisitions Safe Harbor policy encourages companies to self-disclose criminal misconduct discovered by an acquiring company during the acquisition of a target company.
2. The DOJ is seeking to incentivize an acquiring company to timely disclose misconduct uncovered during the M&A process.
3. The DOJ has made clear that under this new Mergers & Acquisition Safe Harbor Policy organizations that do not perform effective due diligence or self-disclose misconduct at an acquired entity will be subject to full successor liability.
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